1. Introduction: The Next Frontier in DeFi Payments

Over the past five years, stablecoins have gradually gained mainstream acceptance globally as a bridge between crypto assets and the real world. From cross-border payments to on-chain transactions, from asset custody to value storage, stablecoins are transforming the traditional financial system’s definition of “money.” Particularly in the DeFi space, stablecoins have become not only key assets for providing liquidity but also the focal point of on-chain payment experimentation. However, when attempting to extend the value capture of the crypto world into real-world “payment” behavior, numerous challenges arise:

• Fragmented payment routes: Users and merchants utilize different chains, wallets, and stablecoins, leading to poor interoperability;
• High costs: On-chain payments are constrained by blockchain scalability, with frequent gas fee fluctuations;
• Lack of a unified clearing mechanism: Fund transfers between chains rely on centralized exchanges or bridging protocols, increasing trust risk;
• High compliance barriers: Executing payments across jurisdictions requires handling complex AML and KYC regulations.

The efficiency of traditional Web2 payment systems stems from their unified clearing networks, strict compliance systems, and robust terminal integration. Currently, Web3 lacks this high level of integration, becoming the “last mile” bottleneck for the development of payment-focused DeFi protocols.

PayFi emerges to bridge this critical gap. Built upon stablecoins, it constructs a modular payment network centered on three core dimensions: clearing and settlement, cross-chain routing, and compliance interfaces, aiming to combine the flexibility of DeFi with the efficiency of Web2 payments, offering new infrastructure for the global payments market.

2. What is PayFi?

1. Protocol Definition

PayFi is an on-chain settlement and payment layer network that connects stablecoin issuers, cross-chain liquidity providers, DeFi protocols, and merchants through standardized modules and compliance interfaces, creating a universal, programmable, and regulation-friendly settlement infrastructure.

PayFi is not merely a wallet or payment DApp; it’s a comprehensive on-chain payment and clearing infrastructure, aspiring to become the “Swift + Visa” of the blockchain world.

2. Core Objectives of PayFi

• Unify payment routes and eliminate inter-chain fragmentation;
• Reduce payment costs and improve settlement efficiency;
• Provide compliance interfaces to adapt to various regulatory environments;
• Support multi-chain, multi-asset payments for better usability by users and merchants;
• Build standardized settlement logic to serve as foundational infrastructure for DeFi protocols.

3. Overview of Key Roles

These roles collaborate in a modular way, forming a composable and open settlement network.

3. Technical Architecture and Core Mechanisms of PayFi

As an on-chain payment and settlement protocol network, PayFi emphasizes high modularity, cross-chain compatibility, and compliance-friendly system design. Its architecture is designed to serve both user payment needs and merchant demands for reliable settlement, liquidity, and regulatory transparency. The system consists of three main layers: Application Access Layer, Protocol Logic Layer, and Asset Settlement Layer.

1. Architectural Overview

The architecture is divided into:

• Application Layer: Interfaces for wallets, merchant terminals, fiat on/off ramps;
• Protocol Layer: Core components like payment routers, clearing logic, compliance modules;
• Settlement Layer: Connections to public chain assets, stablecoin issuers, and bridging networks.

This layered design allows PayFi to adapt to various chains and business scenarios through modular deployments.

2. Three Core Modules

(1) PayFi Router: Cross-Chain Routing and Liquidity Aggregation

The protocol’s “control center,” this module dynamically calculates the optimal route from the sender’s asset to the target asset/chain by:

• Supporting cross-chain asset conversion (e.g., USDC\@Optimism → USDT\@Solana);
• Aggregating data from multiple bridging protocols for real-time route evaluation;
• Sorting paths based on liquidity status, expected slippage, and execution cost.

(2) Settlement Module: High-Efficiency On-Chain Settlement Engine

Responsible for final clearing and reconciliation post-payment, featuring:

• Batch settlement: Merging multiple micro-payments to reduce interactions and costs;
• Zero-knowledge proofs: Enhanced privacy for sensitive data;
• Programmable strategies: Support for T+0, scheduled, or condition-based settlements.

Ideal for high-frequency micropayments and platforms with billing cycles.

(3) Compliance Layer: Flexible Embedded Compliance Engine

Enables global deployment via pluggable compliance interfaces supporting:

• KYC/KYB for users and merchants;
• Blacklist/whitelist filtering for wallets and transactions;
• Regional regulatory adaptation.

Integrates with on-chain reputation systems, third-party audits, and off-chain AML/KYC providers.

3. Multi-Chain and Multi-Asset Compatibility

PayFi supports major chains and assets:

• Chains: Ethereum, Arbitrum, Optimism, Polygon, Solana, Sui, TON, Aptos;
• Stablecoins: USDC, USDT, DAI, EUROC, PYUSD, and native stablecoin PUSD;
• Native tokens: Supports direct payments using ETH, SOL, APT, etc.;
• Fiat ramps: Connects with fiat on/off ramps and bank accounts.

4. Collaboration with Cross-Chain Protocols

Built atop protocols like LayerZero, Wormhole, and Axelar:

• Uses these bridges for asset messaging;
• Constructs its own clearing logic without relying on centralized execution;
• Switches between bridges dynamically for optimal liquidity use.

This approach abstracts the bridge layer as backend infrastructure.

5. Unlocking Time Value in Payment Flows

PayFi enables temporary use of in-transit funds:

• Idle settlement funds can be deployed to DeFi protocols for yield;
• Cross-border payments can be completed within minutes;
• Payment actions generate on-chain credit data usable as collateral (e.g., receivables NFTs).

6. Example Use Case

Imagine you’re in Singapore using USDC on Solana to buy coffee from a German café that only accepts DAI on Arbitrum.

Without PayFi: You’d need to manually swap, bridge, and transfer—costly and complex.

With PayFi: The system auto-routes Solana → Ethereum → Arbitrum, performs swaps and settlement behind the scenes. The merchant instantly receives DAI with a single click from the user—fast, accurate, compliant.

4. Key Application Scenarios: Who Uses PayFi?

PayFi isn’t tailored to a single niche; it’s designed to solve foundational payment and clearing problems across a wide range of scenarios:

1. E-commerce Payments

• Use case: NFT marketplaces, digital goods, creator platforms;
• Experience: Users pay in any stablecoin on any chain, merchants receive preferred assets;
• Value: Seamless routing, fast confirmation, stable settlements.

2. Stablecoin Settlement for DeFi Protocols

• Use case: DEXs, yield aggregators, lending platforms;
• Usage: Protocols use PayFi for cross-chain conversion and reconciliation;
• Value: Reduced slippage, lower clearing costs, efficient liquidity migration.

3. Freelance & Remote Work Payments

• Use case: Global developer platforms, bounty systems;
• Usage: Employers distribute wages via PayFi, users choose their stablecoin/chain;
• Features: Multi-chain distribution, periodic payouts, real-time confirmation.

4. Offline Web3 Merchant Payments

• Use case: Crypto event booths, themed cafés, brand stores;
• Usage: Merchants integrate PayFi POS systems, users scan QR codes with any stablecoin;
• Benefit: Automatic FX settlement, no manual intervention.

5. Enterprise Billing and Financial Automation

• Use case: Cross-border SaaS, supply chains, API vendors;
• Usage: PayFi handles recurring payments, B2B reconciliations;
• Features: Batch payments, on-chain invoices, compliance reporting.

6. Application Scenario Overview

7. Summary

PayFi is chain-agnostic and can be embedded into any on-chain payment scenario. For users, it hides complex routing and conversions. For developers and merchants, it offers a standardized, composable clearing system. Ideally, users don’t even need to know what PayFi is—they just experience payments that are as smooth as in Web2.

5. Roadmap and Future Outlook

PayFi’s growth will be gradual, advancing in parallel with multi-chain ecosystems, stablecoin circulation, and evolving compliance norms. It’s currently in the protocol-building and early integration stage, with a future that spans tech iteration, ecosystem expansion, and open governance.

1. Current Phase: Protocol Launch and Initial Integrations

• Core deployment: Router, settlement engine, compliance modules;
• Multi-chain tests: Ethereum, Arbitrum, Optimism, Solana, etc.;
• Initial partnerships: E-commerce, freelance, content platforms;
• SDK/API: Public developer tools for easy integration;
• Audits & compliance: Security audits and regulatory framework development.

2. Mid-Term Plan: Feature and Ecosystem Expansion

• Assets & Chains: Add support for PYUSD, GHO, LUSD, more chains like Base, zkSync, Scroll;

• Bridge compatibility: Deepen integration with LayerZero, Wormhole, Axelar;

• Native asset (PUSD): Internal stablecoin for settlements;

• Ecosystem partnerships: With stablecoin issuers, Web3 wallets (e.g., Phantom, Rainbow), and POS/payment hardware.

• PayFi Wallet Launch: Visual payment flow, historical tracking, reports, enterprise features.

3. Long-Term Vision: On-Chain Clearinghouse and Governance Network

• Settlement Hub: Multi-chain → unified → redistributable asset clearing;

• Liquidity aggregation: High-efficiency cross-chain value transfers;

• Use case expansion: Receivables NFTs, cross-border payments, supply chain finance.

• Governance: Launch \$PAY token for governance;

• Incentives: Liquidity mining, user rewards via PayPoints;

• Validator role: Community-verifiable path routing via oracles.

• Real-world integration: Connect with fiat ramps and custodians, support ZK and ASP privacy compliance.

4. Summary

PayFi doesn’t aim to disrupt traditional finance overnight but instead gradually permeates every on-chain payment and settlement scenario through modular design. By linking assets, routes, and identities, PayFi could become the foundational payment network of the Web3 economy.