Written by: Foresight Ventures & Bitget Wallet
Introduction: From Traditional Finance to Blockchain Revolution
Globally, the financial system still suffers from high costs and low efficiency, especially in cross-border payments, which are expensive and time-consuming. World Bank data shows that 1.7 billion people worldwide remain unbanked, excluded from the traditional financial system. The emergence of blockchain technology is fundamentally changing this situation.
The core advantage of blockchain lies in its decentralization and transparency, eliminating the dependence on intermediaries, significantly reducing transaction costs, and improving fund liquidity. In this context, crypto wallets have evolved from simple digital asset storage tools to feature-rich financial platforms. PayFi is a typical representative of this innovation, breaking down barriers between on-chain yields and real-world payments, making personal fund management more efficient and intelligent.
The Rise of On-Chain Finance
Limitations of Traditional Finance
Expensive and Inefficient Cross-Border Payments: Cross-border transfer fees can reach 6%-8%. According to World Bank data, the global average cost of cross-border payments is 6.65%, with fees in Africa reaching as high as 8.2%. Transfer times can take days, with high costs consuming much of low-income workers' remittances.
Insufficient Financial Service Coverage: Globally, 1.7 billion people lack bank accounts. In countries with the least financial services, such as Morocco and Vietnam, nearly 70% of the population is unbanked, unable to enjoy basic deposit, lending, and investment services, limiting wealth growth. In countries like Mexico and Colombia, individuals struggle to open US dollar accounts, unable to access dollar assets or high-quality dollar-denominated investment opportunities.
Idle Funds: In the traditional financial system, idle funds are a significant issue. Savings account annual interest rates in developed countries are often less than 1%, while in developing countries, insufficient financial service coverage leads to low fund utilization efficiency.
The emergence of blockchain technology provides a completely new solution to these problems. The combination of decentralized finance (DeFi) and stablecoins allows people to bypass traditional banking systems, directly access US dollar assets, and obtain yields far exceeding traditional finance through on-chain financial tools.
The Rise of On-Chain Finance and Global Trends
The high costs and low efficiency of traditional financial systems have gradually shifted people's attention to Onchain Finance, with cross-border payments and financial inclusivity being particularly prominent issues. Bitget Wallet's Onchain Report shows that 46% of users choose crypto payments primarily for transaction speed, with this need being especially pronounced in emerging markets like Africa (52%) and Southeast Asia (51%). Traditional banking systems have low coverage in these regions, with slow fund settlements, while crypto payments offer faster and more convenient fund transfer methods.
Beyond transaction speed, 41% of users appreciate crypto payments' global accessibility, making cross-border remittances and global transactions smoother. Seamless cross-border transactions are the primary reason for crypto payment preference in North America and Oceania. Different age groups have varying focuses on crypto payments, with Millennials and Gen Z valuing its borderless transaction convenience more than Gen X. Users in the Middle East (38%) and Western Europe (35%) choose crypto payments more for privacy considerations.
Characteristics of On-Chain Finance
Through a decentralized architecture, Web3 transforms financial services from a closed traditional system to an open ecosystem, making transactions more transparent, efficient, and returning more control to users. The global blockchain market is predicted to grow rapidly in the next decade.
Lower Transaction Costs: Blockchain's decentralized architecture eliminates intermediary dependencies, allowing users to conduct direct peer-to-peer transactions, significantly reducing costs. Blockchain-based payment networks have an average transfer cost of around $2. With the application of Ethereum Layer 2 solutions, these costs are even lower, particularly suitable for small payment scenarios. OECD research indicates that blockchain can reduce transaction costs by 60-80% compared to traditional payment methods.
Higher Fund Utilization: The introduction of smart contracts further enhances on-chain finance's automation and efficiency. By preset rules, smart contracts can automatically execute yield distribution or transaction operations without human intervention. After depositing assets in DeFi protocols, smart contracts generate yields according to rules and automatically pay them to the user's wallet, ready for immediate payment when needed.
Transparency and Security: Blockchain's transparency is one of its core characteristics. As a public ledger, every transaction can be publicly reviewed, eliminating trust issues in traditional financial systems. In traditional banks or payment systems, fund flows and fee structures are often opaque, while blockchain allows users to track asset movements in real-time. In decentralized finance platforms, all yield distributions are clear, requiring no intermediary, ensuring asset safety.
How PayFi Changes Personal Finance
PayFi is a new payment financial innovation that connects on-chain yields and transfers with real-world consumption payments, providing a dynamic fund utilization method for personal finance. It allows users' assets to continuously generate yields and be directly used for living expenses when needed. This innovation makes fund flow more efficient and enhances asset use value. For those struggling to access US dollar assets, PayFi offers a way to hold dollars through stablecoins and provides higher investment returns through on-chain financial tools.
PayFi acts like a bridge, seamlessly connecting on-chain yields with real-world payment scenarios. Through smart contracts and on-chain finance, users' yields directly enter payment accounts and automatically cover various expenses. Users can avoid volatility through stablecoins and participate in higher-yield opportunities via DeFi. PayFi achieves dynamic fund utilization through the following mechanisms:
Yield Generation: Users' assets generate stable annual yields through on-chain protocols (like DeFi protocols). These yields come from users staking assets or participating in liquidity pools, typically with annual yields between 5%-8%.
Instant Payments: Users' on-chain yields can be settled in real-time for daily consumption without manual withdrawal or additional operations. This directly connected mechanism allows efficient fund circulation, bringing instant settlement and low-cost advantages, avoiding delays and complex operations common in traditional financial systems.
Financial Empowerment: Stablecoins (like USDT, USDC) provide users with a convenient, safe, and low-volatility payment medium, allowing people to bypass bank and national currency system restrictions, directly access US dollar assets, and achieve wealth growth through high-yield on-chain tools.
The Rise of Crypto Wallets
The Evolution of Crypto Wallets: From Storage and Trading Tools to Comprehensive Financial Empowerment Platforms
If blockchain is the new engine of the financial world, crypto wallets are undoubtedly its key control panel. From early digital asset storage tools to today's multi-functional financial platforms, crypto wallets' development witnesses the rise of on-chain finance. Crypto wallets have transformed from traditional storage tools (like MetaMask) helping users manage and store crypto assets to multi-functional financial platforms (like Bitget Wallet), integrating storage, trading, yield generation, and payment services, comprehensively upgrading user experience.
The Important Role of Crypto Wallets in PayFi
As the core infrastructure of on-chain finance, crypto wallets not only provide secure asset storage but also support yield generation, payment, and transfer functions.
On-chain Financial Assistant: A wallet is not just a storage tool, but also a user's on-chain financial helper. By integrating with mainstream DeFi protocols like AAVE and Compound, users can stake or store assets (such as USDT, ETH) to obtain higher annual yields compared to centralized platforms, and manage distribution through smart contracts. These earnings are directly generated on-chain, allowing users to earn while storing without complex operations and achieve dynamic value appreciation. In countries where US dollar accounts cannot be opened, crypto wallets become a key method for people to obtain stablecoins, enabling them to avoid local currency depreciation risks and enjoy high-yield opportunities from US dollar assets.
Global Payment Capability: Payment is the core function of crypto wallets, directly enhancing users' daily consumption experience. Wallets support multi-currency payments (such as BTC, USDT) and avoid delays in traditional payments through instant settlement. Moreover, using blockchain technology, payment fees are reduced by 50%-80% compared to traditional channels, which is especially suitable for users who need frequent cross-border payments.
Simplified Transfer Experience: Blockchain's decentralized technology completely simplifies the traditional transfer process, allowing users to achieve point-to-point fund transfers without intermediary institutions. Cross-border transfers are equally fast and transparent, suitable for international remittance scenarios, with fees far lower than traditional bank cross-border transfers. Users can fully control their funds, ensuring asset freedom and security.
Future Outlook: How Crypto Wallets Reshape Personal Finance through PayFi
Crypto wallets have gone beyond being mere storage tools and become the core platform for personal finance. PayFi redefines fund management by integrating on-chain earnings with real-world payments, enabling funds to flow efficiently and achieve maximum utilization.
Deep Integration of Financial Ecosystem
Crypto wallets not only support asset storage but also integrate earnings management and payment functions, allowing users to earn yields in decentralized finance (DeFi) and seamlessly use them for real-world payments.
Innovation Driven by Blockchain Technology
Blockchain's transparency eliminates the trust deficit in traditional finance, while smart contracts' automation capabilities improve payment and earnings management efficiency. Meanwhile, with the popularization of energy-saving technologies, blockchain networks are becoming more sustainable.
Popularization of Crypto Wallets and PayFi
The use of crypto wallets and PayFi is expanding from tech enthusiasts to ordinary users, with more and more users and enterprises joining this ecosystem, jointly promoting financial service innovation and development.
In the future, everyone can seamlessly manage funds through crypto wallets, achieving wealth growth and financial freedom. This is not just a technological innovation, but a completely new financial lifestyle that will push the global financial system towards a more open and equal era.
