Abstract

• DeFi Summer Retrospective and the Rise of PayFi: In 2020, DeFi Summer was driven by innovative primitives such as AMMs, decentralized lending, and yield aggregators. Within a few months, TVL (Total Value Locked) surged from $1 billion to $15 billion, achieving explosive growth. Five years later, PayFi has quietly emerged as a new paradigm in on-chain payment finance, aiming to apply blockchain technology to everyday payments. Emphasizing network accessibility and large-scale adoption, PayFi signals a new wave of on-chain financial momentum.

• Core Drivers and Business Models of PayFi: The core driver of PayFi is the Time Value of Money (TVM), using on-chain mechanisms to efficiently manage funds and generate yield. Its business models include interest-bearing payment tokens, RWA payment financing, and payment innovations bridging Web3 and DeFi.
• The Scale and Potential of Stablecoins: As the core medium of PayFi, stablecoins have seen explosive adoption. As of June 2025, global stablecoin circulation exceeds $240 billion, with over 35 million monthly active addresses and more than 40 million daily transactions. Annual transaction volume has reached nearly $20.5 trillion—far surpassing PayPal and cross-border remittance systems and often exceeding Visa—making stablecoins the world’s second-largest payment system after ACH.

• Increasing Clarity in Global Regulatory Policy: International bodies like the FSB and BCBS have issued regulatory principles, while regional regulations such as Hong Kong’s Stablecoin Bill, the EU’s MiCA, and the US GENIUS Act have helped clear policy barriers for PayFi’s compliance and mainstream adoption.
• Technological and User Experience Optimizations: Technological breakthroughs—including Layer 2 scaling (with average gas fees well below $1), account abstraction (AA), and cross-chain interoperability—have significantly improved PayFi’s transaction efficiency and user experience, bringing it closer to the seamless feel of Web2 applications.
• Economic Incentives Driving PayFi Growth: Yield-bearing stablecoins (e.g., USDY, sUSDE) now have a combined market cap exceeding $11 billion and have distributed over $600 million in cumulative yield. By embedding asset returns into payment processes, PayFi enables “earn while you pay.” In practice, PayFi offers clear cost and efficiency advantages; for example, Celo’s pilot with PayU reduced transaction fees by 60% while enabling real-time settlement.

• Fundamental Differences Between PayFi and DeFi Summer: PayFi’s growth trajectory is more sustainable: its core driver is real-world utility rather than speculative high yields. Its target users are the general public—not only crypto-native participants. Its capital structure leans toward long-term strategic capital, and it starts within stricter regulatory frameworks. PayFi’s “Summer” will likely unfold as a gradual, durable, and transformative upgrade of payment infrastructure, rather than as a speculative bubble.

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