Web3 Payment Rail
Most businesses’ financial operations include recurring payments, such as rent, bills, subscriptions, payroll, and more. Today, these kinds of recurring payments are extremely operationally intensive to handle with crypto rails, due to the enormous manual complexity of executing a transaction on the blockchain.
Loop Crypto is a new platform that allows organizations to automate recurring crypto transactions, substantially reducing the complexity of handling an organization’s financial operations on the blockchain.
Loop’s core product is similar to a traditional bank’s auto-pay feature; with a single approval, a Loop user can automate recurring transactions, so they do not have to re-sign and re-submit the same transaction during each payment period. It does this by delegating the duty of executing a recurrent transaction from the end user to an automated smart contract, allowing for automatically invoked payments.
Loop’s core auto-pay product includes:
webhooks that make it easy for businesses to integrate crypto payments into existing financial infrastructure
features that allow customers, not just an organization’s treasury managers, to authorize recurring payments, enabling crypto-based subscription services and more
automated error-handling around transactions, including verifying that transactions have completed and payment retries
a powerful analytics platform that offers businesses deep insights about their crypto payments and automatically aggregates information like transaction history, receipts, and more
Loop also allows users to automate recurring swaps, where Loop makes a trade on their behalf recurrently against a chosen AMM. This allows investors to easily implement dollar cost averaging strategies and better automatically manage their portfolios.
Loop was founded by Elena Steinman and Shane van Coller, both of whom previously helped build the ultra-fast DeFi trading platform bloXroute. The company recently raised a $4 million seed round led by Andreessen Horowitz, with participation from Alchemy Ventures, CoinList, and dozens of other angels.
Ultimately, Loop is a major step towards a future where companies can easily integrate crypto payments into their financial operations, helping accelerate widespread organizational adoption and popularizing crypto as a legitimate payment rail.
Towards Mainstream Crypto Adoption
One key barrier to entry for new users in web3.0 is the enormous complexity of completing what should ideally be simple, self-contained actions. Sending assets to an account on Ethereum, for example, requires a non-trivial number of steps: re-logging in to one’s MetaMask wallet; ensuring that one is connected to the right network; entering the recipient’s wallet address; signing and submitting the transaction; verifying the transaction completed on Etherscan. Compared to the simplicity of sending money to a friend on Venmo or paying one’s rent from their bank account, crypto today offers an unsophisticated, unfriendly UX.
To take the payments example further, consider how a significant portion of payments are often recurring––rent, bills, payroll, subscriptions, etc. Completing the workflow outlined above for each payment period is extremely operationally intense, making crypto a poor rail for handling recurrent transactions. Handling recurring payments with crypto becomes even trickier in the context of businesses, who often have multiple partners to pay on a weekly, monthly, or annual basis. To sustainably mainstream users, crypto must reach a point where common workflows, like making recurring payments, are as easy to complete on the blockchain as they are with traditional financial products.
What is Loop Crypto?
Loop Crypto is a new platform that allows organizations to automate recurring crypto transactions, substantially reducing the complexity of handling an organization’s financial operations on the blockchain. The project believes in, and is actively working towards, a future where companies can easily integrate crypto transactions into their financial workflows.
What does Loop offer?
Loop’s core product is similar to a traditional bank’s auto-pay feature; with a single approval, a Loop user can automate recurring transactions, so they do not have to re-sign and re-submit the same transaction during each payment period. It does this by delegating the duty of executing a recurrent transaction from the end user to an automated smart contract, allowing for automatically invoked payments.
Loop has also abstracted away all of the technical complexity of the on-chain smart contracts and the off-chain tooling behind a suite of easy-to-use webhooks, greatly simplifying the process of integrating crypto payments into one’s product. Particularly for crypto-native businesses, which often take the shape of DAOs with multisig-managed treasuries, Loop makes it remarkably easy to set up sustainable financial workflows that remove the overhead of having every key-holder sign every transaction all of the time.
On top of its core autopay feature, Loop offers its users several additional benefits, including:
allowing customers, not just an organization’s treasury managers, to authorize recurring payments, enabling crypto-based subscription services and more
verifying that transactions have landed, conducting payment retries, saving transaction receipts, and sending reminders so that end users don’t have to
unlocking powerful payment insights for businesses through Loop’s analytics dashboard, making it easy for organizations to get a pulse on their finances and track transactions
Loop also allows users to automate recurring swaps, where Loop makes a trade on their behalf recurrently against a chosen AMM. This allows investors to easily implement dollar cost averaging strategies and better automatically manage their portfolios. Moreover, Loop is planning to allow AMMs like Uniswap and Balancer to directly integrate their front-ends with Loop’s recurrent swap smart contracts, meaning that users of those products can easily gain access to Loop’s automation for trades.
Loop has also invested heavily in security efforts to ensure that their automated smart contracts are not exploited; namely, only the counterparty company to a transaction is able to receive the sending user’s assets, and the contracts are coded so that there are no “infinite allowance functions” that can be used to empty a wallet’s balance.
Who’s behind the project?
Loop was founded by Elena Steinman and Shane van Coller, both of whom previously helped build the ultra-fast DeFi trading platform bloXroute. The company recently raised a $4 million seed round led by Andreessen Horowitz, with participation from Alchemy Ventures, CoinList, Lauren Stephanian, myself, and dozens of other angels.
The company is currently testing its product with ‘alpha customers,’ targeting a public launch this coming June. Interested partners can request to join the beta here.
Final Thoughts
Recurring payments are one of the most common financial workflows for organizations today. To get these organizations to move their financial operations to the blockchain, it’s imperative that handling recurring payments with crypto reach the same level of simplicity and automation as with using traditional financial products.
Loop makes it easier than ever for organizations to automate recurring crypto transactions by delegating the steps involved in executing a transaction from the end user to a smart contract, which can be automated. Businesses can easily integrate with Loop’s webhooks to set-up recurring payment workflows, isolating all of the technical complexity of automated smart contracts and off-chain blockchain gateways away from their tech stacks. Moreover, Loop superpowers businesses with automated error handling around payments and powerful insights about their payment history, raising the incentives to move their financial workflows on-chain. In sum, Loop is a major step towards a future where companies can easily integrate crypto payments into their financial operations, helping accelerate widespread organizational adoption and popularizing crypto as a legitimate payment rail.
- Paul Veradittakit
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IN THE TWEETS
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EthCC, Paris, July 19-22
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ABOUT ME
Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.