A new crypto startup called Loop is trying to make Web 3’s payment rails – especially those underpinning newsletters, employee payments and other recurring transactions – a little less anger-inducing for their crypto-paying customers.
The company recently secured $4 million in Andresseen Horowitz-led seed funding, CEO Eleni Steinman told CoinDesk. A former strategist at bloXroute Labs, she’s been building Loop in stealth with co-founder Shane van Coller, also an alum of the mempool-focused company.
They left bloxRoute to solve one of the wallet pain-points that Steinman said is holding Web 3 growth back: recurring payments. A customer of Spotify can set his credit card to auto-pay the monthly fee. But in crypto, h’d need to remember to sign the outbound transaction 12 times a year.
Recurring payments only get more cumbersome when decentralized autonomous organizations (DAO) and multisig wallets join the mix, Steinman said. The way crypto wallets work, users must approve outbound transactions every time they pay.
“You can imagine: DAOs trying to pay employees – that’s a recurring payment. Paying back a loan or giving a donation – these are all tasks that are annoying enough when you have one single signer, but when you have a multisig, I mean, that is the worst headache in the world.”
Loop passes the duty of executing payments from users to an automated smart contract. Once given permission, it will automatically withdraw set amounts of crypto from their wallets, saving them the trouble of, for example, re-signing transactions for a $20 newsletter subscription every month.
“So you can tell the contract, ‘Hey, you can take 500 USDC every four weeks.’ And then what the keepers do is they call the function that then goes to the end-user’s wallet and withdraws the funds. But you can only call a function if it’s a valid withdrawal, if the four weeks have passed.”
Such an arrangement might spook security hawks especially in this era of million-dollar crypto hacks. But Steinman said Loop’s smart contracts will hold up against exploitation. Only the counterparty company can withdraw user payments from Loop’s smart contracts, she said. And they're hard-coded without “infinite allowance functions” that might otherwise drain wallets dry.
“No matter what, the contract can never take more from you than that amount,” she said.
In the background
“Alpha customers” are testing Loop’s systems – called “templates” – internally ahead of a public launch targeted for June, Steinman said.
Not that the subscription-paying public will notice what Steinman hopes to be Loop’s seamless integration with “Pay with crypto” checkout buttons across the web. “You probably don't know you’re using us,” she said – that’s by design.
Loop “hasn’t yet committed to a token,” Steinman said, but offering one could help the company decentralize the governance behind its tooling. That would be in keeping with the spirit of decentralization, Steinman said.
A_capital, Alchemy Ventures, CoinList and angel investors including Lauren Stephanian, Pantera’s Paul Veradittakit, Imran Khan and Nansen’s Alex Svanevik participated in the round, a press release said. Loop incubated with Archetype, according to Steinman.
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