The new startup in crypto is 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.
According to Eleni Steinman, CEO of the company, $4 million was raised in seed funding by Andresseen Horowitz. A former strategist at bloXroute Labs, she’s been building Loop in stealth with co-founder Shane van Coller, also an alum of the meme pool-focused company.
Steinman claimed that recurring payments are a problem in Web 3’s wallet. They have left bloxRoute. Spotify allows customers to set up their credit card to automatically pay the monthly fee. However, in crypto, he would need to remember 12 times per year to sign the outbound transaction.
Steinman stated that recurring payments become more complicated when multisig wallets and decentralized autonomous organisations (DAOs) are added to the mix. Users must approve all outbound transactions each time they pay crypto wallets.
“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 transfers the responsibility of paying users to an automated smart agreement. It will automatically withdraw the specified amount of crypto from users’ wallets once they have given their permission. This saves them the hassle of resigning transactions every month for a $20 newsletter subscription.
“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.”
Security hawks might be concerned about such an arrangement, especially considering the era of multi-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.
“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. Steinman stated that this would be in line with the spirit decentralization.
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. According to Steinman, Loop was incubated by Archetype.