Gate Research Institute: Beyond DeFi Summer: Is PayFi Summer Coming Soon?

Summary

• A Review of DeFi Summer and the Rise of PayFi: In 2020, DeFi Summer was driven by innovative primitives such as AMM, decentralized lending, and yield aggregators, with TVL skyrocketing from $1 billion to $15 billion within months, achieving explosive growth. Five years later, PayFi has quietly emerged as a new paradigm of on-chain payment finance, aiming to apply blockchain technology to daily payments, emphasizing the accessibility and scalability of the network, heralding a new wave of on-chain financial enthusiasm.

• PayFi Core Driving Force and Business Model: The core driving force of PayFi is the Time Value of Money (TVM), which efficiently manages funds on-chain and generates returns. Its business model includes interest-bearing payment tokens, RWA payment financing, and payment innovations that integrate Web3 and DeFi.
• The scalable application and potential of stablecoins: As the core medium of PayFi, the application scale of stablecoins has seen explosive growth. By June 2025, the global circulation of stablecoins has exceeded $240 billion, with over 35 million monthly active addresses and an average of over 40 million payment transactions per day. The total transaction volume for the year is approaching $20.5 trillion, significantly surpassing PayPal and cross-border remittance systems, and has repeatedly exceeded Visa, becoming the second-largest payment system after ACH.

• Global regulatory policies are gradually becoming clearer: International organizations (such as FSB, BCBS) have proposed regulatory principles, and regional regulatory legislation has been introduced, such as Hong Kong's "Stablecoin Regulation Draft", the EU's MiCA, and the US "GENIUS Act", paving the way for the compliance and mainstream adoption of PayFi.
• Optimization of technology and user experience: Technical breakthroughs such as Layer 2 scaling (with average Gas fees far below 1 dollar), Account Abstraction (AA), and cross-chain interoperability have significantly enhanced the transaction efficiency and user experience of PayFi, making its operational experience comparable to traditional Web2 applications.
• Economic incentives drive PayFi growth: The market capitalization of yield-bearing stablecoins (such as USDY, sUSDE) has exceeded 11 billion USD, with total issued yields surpassing 600 million USD, achieving "earning while paying" by embedding asset returns into payment processes. PayFi has significant advantages in terms of cost and efficiency, for example, the pilot program between Celo and PayU reduced transaction fees by 60%, and settlements are realized in real-time.
• The fundamental difference between PayFi and DeFi Summer: PayFi's growth path is more robust, driven by actual application value rather than speculative high returns; the target users are the general public rather than just native crypto users; the capital structure is primarily composed of long-term strategic capital; and it starts in a more stringent regulatory environment. PayFi's "Summer" will be a moderate, lasting, and profound revolution in payment infrastructure, rather than a bubble-like climax.

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