Exclusive Interview with Huma Finance Co-Founder Richard: Serving Real Payment and Financing Needs, User Education is the Biggest Challenge Currently

Author: Nancy,

Huma is a legendary bird that appears in Middle Eastern and Persian mythology, symbolizing hope, divinity, and luck. According to legend, Huma never lands, and whoever is fortunate enough to have its shadow pass over them will receive the mandate of a king, which is also the inspiration behind the naming of Huma Finance.

As one of the currently popular PayFi protocols, discussions around the product mechanisms and development paths of Huma Finance have been intensifying recently, with both affirmations of its innovative model and doubts regarding its transparency and profit mechanisms.

Recently, we interviewed Richard Liu, co-founder of Huma Finance, to help everyone gain a more comprehensive understanding of Huma's operational logic, current development status, and views and judgments on the future of the entire PayFi sector.

Break financial barriers with on-chain technology, supported by the Solana Foundation.

Richard is a versatile entrepreneur with a background in entrepreneurship, venture capital, and top technology companies, possessing a strong technical background and insights into the financial industry.

During his nearly eight years at Google, Richard led several "from 0 to 1" innovative projects, including Google Fi, which is used by many cross-border users. In 2016, he left Google and immersed himself in the entrepreneurial wave, co-founding the smart career development platform Leap.ai and serving as CEO, matching thousands of job seekers with jobs using AI technology, and the project was later acquired by Facebook (Meta).

Subsequently, Richard joined the fintech company EarnIn as CTO, a platform that helps users "get an advance on their paycheck." It was this experience that planted the crucial seeds for his later founding of Huma Finance.

"Chinese people like to save, but many Americans live paycheck to paycheck. If a child has a birthday or an unexpected event occurs, they may really not be able to come up with that money. When they can access their wages in advance through an App, that sense of gratitude and happiness is the motivation we can feel every day," Richard recalled in the interview.

EarnIn's annual lending scale reaches as high as $10 billion, but even such a large and profitable company faces rejection from the traditional financial system when it comes to financing emerging fintech enterprises. "You can't get money from the bank, you can only seek PE (private equity), but when they find out you have only one or two lending channels, they will 'squeeze your neck.' The terms are harsh, and the space is very limited."

This experience made Richard realize a serious imbalance: high-quality financial assets are often held by a small number of people such as private equity firms, funds, and family offices, while ordinary users cannot participate. Meanwhile, these assets could have provided more liquidity to the market and created profits for the general public.

Richard also started to think about whether these assets could be brought on-chain through blockchain technology. On one hand, it would provide enterprises with broader financing channels, and on the other hand, it would allow ordinary people to access high-quality investment opportunities that were previously excluded. However, he also realized that not all assets are suitable for blockchain. "Many crypto users can accept the volatility risk of cryptocurrencies, but they have almost zero tolerance for credit risk." Therefore, he chose to focus on the payment financing sector, which has extremely low credit risk and very short cycles.

In April 2022, Richard officially co-founded Huma Finance. The project initially focused on a DeFi lending protocol, attempting to bring the enormous financial demands of the real world onto the blockchain, targeting financial technology companies as the primary service group. Through continuous exploration, the team gradually shifted its focus to payment financing, with a core consideration of its extremely low credit risk and clear cycles.

In 2024, when the Solana Foundation listed PayFi as a strategic focus, Richard had a meeting with the Foundation's chair, Lily Liu, who clearly stated, "You understand the underlying logic of payment financing, which perfectly aligns with Solana's strategy. You should build on Solana, and we will fully support you."

"We're a multi-chain platform, but Solana is the main battleground at the moment." In the interview, Richard also emphasized that Solana provides an ideal environment for Huma Finance's high-frequency PayFi clearing business. What really surprised the team was the positive response and substantive support of the Solana Foundation during the cooperation process, such as when Huma Finance had just joined the Solana ecosystem and the technology was not yet familiar, Solana arranged a team of excellent engineers to assist in the development. At the same time, in the early stage of on-chain financing, Solana introduced many early-stage LPs (liquidity providers), and the introduction of large institutions built trust for on-chain financing. In addition, Huma Finance and the Solana Foundation plan to jointly organize five PayFi ecosystem conferences to promote the advancement of the industry.

"Whether it is technical issues or institutional resource integration, Solana has achieved it, and many things have even exceeded our expectations," Richard admitted. Today, Huma Finance has become a flag bearer of PayFi within the Solana ecosystem.

For Richard, Huma Finance is not only a continuation of the mission from the EarnIn era but also a natural extension of his years of experience bridging technology and finance. So far, Huma Finance has publicly raised over $46 million, and the on-chain transaction volume has surpassed $4 billion.

Focus on cross-border payment advances and credit card business, creating a strategic closed loop of platform + applications.

In the interview, Richard introduced that Huma is the first PayFi network, mainly with a strong PayFi infrastructure, especially in terms of the financing layer, and a range of proprietary and third-party applications. The core application scenarios of the PayFi ecosystem can be divided into three major sectors: cross-border payment advances, credit cards, and trade finance. At present, Huma Finance mainly focuses on cross-border payment advances and credit cards.

In response to external doubts about Huma's profit mechanism, Richard pointed out that in the area of cross-border payment financing, Huma Finance, through its subsidiary Arf, focuses on providing short-term financing services for payment companies. The payment terms for this type of business usually last only a few days, offering higher capital efficiency and more controllable risk characteristics. Richard noted in an interview that the industry itself has formed a stable pricing structure: for SWIFT remittances, the fee per transaction is usually between 20 to 60 RMB; while using payment company channels for remittances, the handling fee ranges from 2% to 5%. The daily borrowing rate among payment institutions is about 10 basis points.

"At Huma, users usually pay a capital cost of 6~10 basis points per day, which is a very common price in the current industry. In addition to the reasonable price advantage, we also use stablecoins as the underlying liquidation, combining the natural advantages of blockchain and stablecoins into the system to build an efficient and safe clearing system, which is also a technical innovation to the existing order. Richard bluntly said that cross-border payment advances are a supermarket with a volume of up to $4 trillion. Because the market base is extremely large, and the scale of the advance business currently handled by Huma Finance is still small, it will not have a significant impact on the overall price level of the industry for the time being. Only in the future, as the platform's transaction volume grows to tens of billions or even hundreds of billions, it may drive changes in the industry's cost curve. Of course, in addition to Huma Finance, other competitors will also gradually leverage more low-cost funding sources by enhancing brand trust and optimizing the capital cost structure, triggering changes in the market structure.

Apart from cross-border payment financing, Richard believes there is an even greater opportunity in the credit card financing sector—a massive market worth up to $16 trillion. Taking the United States as an example, after consumers swipe their cards, issuing banks are required to settle the funds to the merchant's account through the payment network within 2-3 days, while some emerging markets like Brazil can even delay this for up to 30 days. During this period, before users actually repay, banks effectively bear the financing responsibility. Meanwhile, there is also a waiting period for funds on the merchant side. However, many merchants are actually willing to pay a fee to have their funds available immediately.

Richard said that he and Erbil have experience in card issuance, and are deeply involved in the design and execution of the credit card payment chain, whether it is working together in the Google Pay system or leading the card issuance business in EarnIn. In other words, the team not only has the ability to understand the complexity of the industry, but also has the experience to polish products and models from the ground up.

Regarding trade finance ( Trade Finance ), Richard pointed out in an interview that although Huma Finance's system technically has the capability to support trade finance, the generally longer payment terms and slower capital turnover of this type of business do not align with Huma Finance's current "high-frequency, short-cycle" strategy, and therefore they will not directly engage in it for the time being.

In terms of funding access, Huma Finance, prior to Huma 2.0, primarily targeted professional investors or institutions. With the recent launch of Huma 2.0, participation for retail investors has been opened up under compliance requirements, allowing users to choose between Classic mode or Maxi mode. Richard believes this is not only an expansion at the product level but also deeply aligns with the core concept of community ownership.

At the same time, considering that users generally do not want their funds to be forcibly locked up, Huma has also made a design balance: although B-end assets usually have a fixed account period (such as three months) and cannot be withdrawn at any time, the platform allocates about 80% of the funds for paying transaction financing, while approximately 20% of the assets will be allocated as high liquidity assets to meet users' needs for redemption at any time.

"We will not force users to lock up their assets, as this is a clear request from them. To ensure a smooth redemption process, we will reserve a certain proportion of liquid assets, which typically allows the redemption process to be completed in 1 to 2 days," Richard emphasized.

In addition, Richard explained that Huma Finance chose to actively embrace DeFi mechanisms during its early financing stage rather than just dealing with traditional financial institutions. Unlike traditional financial institutions, which have low communication efficiency and long response cycles, DeFi provides a highly transparent and fast financing path. “Anyone involved in financial asset allocation understands that it is not easy to scale assets, especially in the early stages. Traditional financial institutions have slow processes and complex integrations, which often slow down the snowball effect. There is a lot of capital in the market willing to support quality assets, but under the traditional system, there is a lack of transparent and convenient participation channels. We are willing to display asset data completely transparently on-chain, which helps us gain the trust and financial support of the DeFi community, significantly aiding our development speed.”

In addition to efficiency and transparency, Richard also emphasized the value of community co-construction. He stated that Huma Finance highly recognizes the power of the community, especially under the premise of compliance, empowering retail investors to participate collectively in quality asset opportunities. "What attracts me most about Web3 is that it enables true community co-construction and sharing. Such mechanisms are almost impossible to exist in the traditional financial system," Richard added.

"Google currently supports the growth and user retention of its platform through the Android platform and core applications such as Gmail, YouTube, and Search as ecological anchors. Similarly, we hope that the PayFi platform not only provides underlying capabilities and scalability but also has core products to drive real demand and capital flow." Richard also emphasized in the interview that Huma Finance is not just looking to build a single product, but rather a PayFi infrastructure platform that can run various products and applications, whose value far exceeds that of any standalone application.

Because of this, Huma acquired its largest customer, Arf, thus forming a closed-loop ecosystem of "platform + app". Richard believes that the value of the platform itself is much higher than that of a specific application, and it can connect the capital side and the asset side to support financial innovation in more scenarios.

It is worth mentioning that Richard also talked about the phased goals and realization path of Huma Finance. Not long ago, Richard stated that the platform's phased goal for 2025 is to achieve a cumulative trading volume of over $10 billion. He further expressed, "Currently, our main trading increment comes from Arf's core clients. Although the platform has already established a strong pipeline of potential client collaborations, the implementation and onboarding for each client require a certain period, including the on-chain process, which often takes several months and involves the opening of bank accounts and local regulatory approvals, with processes varying by region. Our current focus is on how to accelerate this process. The team is also exploring more efficient support systems to expedite the client onboarding process."

On the funding side, Huma is also constantly optimizing the user experience and attractiveness. "After we launched Huma 2.0, the feedback from the market has been very positive." Richard said that under the premise that the amount of funds deposited is controlled, the platform has a full pool in a short period of time. The number of participating users and the participation in the Maxi model exceeded expectations. At present, the activity and user interest of the capital side are very high, and once the quota is released and more large investors are introduced, the growth space is very sufficient. In the future, the team's main focus will be on accelerating the on-chain transactions of Arf customers, and at the same time promoting the on-chain deployment of credit card financing scenarios.

Introduce traditional financial risk control logic to create multiple security lines for assets.

Huma Finance has sparked market discussions due to its PayFi model, with some investors concerned about the potential for defaults or explosive risks.

In response to market concerns about asset security, Richard explained that Huma Finance draws on the classic risk control logic of traditional structured finance, introducing First-Loss Cover and a senior/junior structure, supplemented by multiple protection mechanisms. The goal is to create a DeFi product system with institutional-level risk control, which is particularly evident in its core asset Arf's cross-border payment financing business.

Specifically, for the selection of service users, Huma Finance's Arf business only serves licensed financial institutions in developed countries (such as the United States, the United Kingdom, France, and Singapore), avoiding areas with complex foreign exchange controls. These institutions are required to meet strict compliance requirements and have low credit risk, which provides Arf with a basic level of risk shield and reduces counterparty risk. At the same time, Huma Finance has formulated a strict internal risk control rating system for all cooperative institutions, and graded them (including Level 1, Level 2 and Level 3) based on their financial status, stability of remittance routes, counterparty risk and other factors, and currently only serves customers with Level 1 and Level 2 ratings. In the operation process, the advance recipient must receive the customer's remittance in advance, and the funds will be deposited into a special account for special funds, which is supervised by the bank and can only be used for the cross-border transaction. Huma Finance will release the funds for payment only after verifying that the payment has indeed been received and meets the previous risk model assessment; In terms of legal segregation, the assets involved in Arf are managed by an independent SPV (Special Purpose Vehicle), which is completely segregated from the assets of Huma Fiance or Arf's main company. Even in the event of extreme bankruptcy of Arf, the user's assets are still protected by law; In terms of account period response mechanism, Huma Finance's account period is designed to be extremely short, and the advance payment and recovery are usually completed within a few days. Once an institution has delayed payment, credit changes, etc., the system can quickly adjust its credit limit or even suspend its credit limit to ensure that risks are identified and controlled at an early stage. Historical data shows that the bad debt rate of the financial system in the past 20 years was only 0.25%, and Huma Finace's choice to provide short-term business to developed countries means that the bad debt rate is even lower.

Even in the face of possible large-scale redemptions or systemic risk events, Richard pointed out in the interview that Huma Finance has also designed a number of contingency mechanisms: for example, Arf has clearly set up a margin of 2%, covering several times of the regular bad debt rate, which is gradually established by the platform's profit precipitation, and is preferentially used to cover possible bad debt risks; Regardless of whether the user's funds are locked or not, they will be "fairly liquidated" in extreme scenarios to avoid structural unfairness caused by "profit from the first runner"; In the event of default or bankruptcy of the partner institution, Huma Finance has the ability to recover most or even all of the funds through legal channels because the client's funds remain in segregated accounts and circulate in the regulatory system. This mechanism has not been triggered in the past, but it is feasible in terms of legal structure and process.

In addition, regarding transparency, Richard revealed that all funds of Huma Finance are held in Fireblocks wallets, flowing through pre-defined compliant paths and requiring multi-signature approval to ensure that the funds are not misappropriated. Moreover, the flow of funds can be traced in real-time through the blockchain. Currently, Huma Finance has disclosed some information on the Dune Dashboard and will gradually improve the dashboard in the future to show more detailed fund dynamics. Additionally, Huma Finance releases a monthly fund flow report, disclosing the allocation and usage of funds within the pool, and plans to incorporate this into smart contracts in the future to further enhance transparency and auditability through a decentralized approach.

It can be seen that the core logic of Huma Finance does not rely on market sentiment or Ponzi schemes to support its liquidity, but rather establishes a highly resilient and accountable DeFi financial ecosystem through multiple risk control layers, legal frameworks, and proprietary capital buffers. Although extreme risks can never be completely avoided, its systemic buffering mechanisms and liquidation principles aim to build multiple lines of defense for the safety of user assets.

Strengthening community building, user education is the biggest challenge currently.

"Disrespect towards the community and users is an absolute red line for Huma Finance, and sincerity is the tool that penetrates all noise." Following recent controversies in the community due to team members' communication style, Richard promptly released an open letter in response and further elaborated on the team's reflections on community building and future improvement directions during an interview.

On the one hand, Richard admits that there are communication problems due to the mismatch between people and jobs. "Our colleague was very hardworking and creative, but I put her in the wrong position – to communicate with the outside world. It's not her forte, I should have realized it sooner. To this end, Richard has realigned his responsibilities for external communications, with the Chinese-speaking community being handled by Richard himself and the English-speaking community being handed over to another co-founder, Erbil Karaman.

"We believe that community communication is one of the most critical tasks for Crypto companies, and co-founders best represent the company's mission and values; they must be at the forefront of community communication." This adjustment is also a direct response and structural repair by Huma Finance to past issues.

Moreover, Richard emphasized that the team has reached a consensus internally: every piece of feedback from the community, regardless of its wording, deserves to be seriously listened to and reflected upon. "Regarding community criticisms, we need to maintain a healthy mindset and try to understand the real concerns they have. We should either clarify our explanations or admit that we indeed haven't done well enough and make improvements actively. For example, on the issue of transparency, we did not prioritize it highly enough in the past. In the future, we will enhance this aspect to ensure that information disclosure is clearer and more systematic."

At the end of the interview, Richard also shared his overall views on the PayFi track, particularly the core key to bridging the gap between traditional finance and DeFi, as well as the challenges and solutions faced in user education and adoption.

"The core of PayFi is to use blockchain technology to serve the real-world payment and financing needs." Richard pointed out that while many financial institutions and payment companies are very interested in this model, its actual implementation often gets stuck at the most traditional aspects - compliance and the banking account system.

He further pointed out that compliance and the pathways for funds in and out of the chain are the most critical middleware in the entire ecosystem. If Hong Kong can introduce clearer relevant legislation that allows local payment companies to legally and conveniently access on-chain services, it will not only be a breakthrough for Hong Kong itself but also a tremendous boost for the development of the entire PayFi ecosystem.

In addition to connecting with traditional finance, Richard also stated, "We not only hope that users invest their money in the Huma Finance platform, but more importantly—can these PayFi assets 'go out' in the DeFi ecosystem and become core components of the entire DeFi world?"

But between ideals and reality, there is the most difficult threshold to cross - user education. "This is actually the biggest challenge we are facing right now," Richard admitted. For DeFi users, they are accustomed to the "token issuance logic" of high APY, and are instead unfamiliar with the PayFi revenue structure based on real lending and without token subsidies. "Even if I tell them that it can really generate a 12.5% return here, higher than many on-chain protocols, their first reaction is often: Are you running a Ponzi scheme? Is it fake?" For traditional finance practitioners, they are filled with doubts about the entire technical path of DeFi. "Many people will directly ask me, why can't we complete the operation directly with fiat accounts? Why do we have to use stablecoins?" And once stablecoins or on-chain liquidation are involved, they hesitate due to unclear regulations.

Richard pointed out that this "cognitive dissonance" stems from the unfamiliarity of the two circles with each other's language and logic. "This also means that our team needs to be able to speak both 'languages' well, using both DeFi jargon and traditional finance terminology. PayFi has a long way to go; we need to work with the community to generate more content, enabling more people to better understand PayFi, and jointly build this sector, so that we can develop PayFi into the most successful application of Crypto in real life as soon as possible."