Pantera Partners Interpret the New Web3 Payment Platform Loop

Written by: Paul Veradittakit, Pantera Capital

Compiled by: Amber, Foresight News

Recurring payments account for a significant portion of most businesses' financial expenditures, such as rent, bills, and salaries. However, due to the high barriers to executing transactions on the blockchain and the relatively complex transaction processes, it has been challenging to use blockchain for these high-frequency recurring payment operations.

The Loop Crypto introduced in this article is a new platform that allows organizations to automate recurring payment cryptocurrency transactions, significantly reducing the complexity of handling organizational financial operations on the blockchain.

Loop's core product is similar to the automatic payment features of traditional banks; after a one-time "signing" approval, Loop users can automatically make subscription-based transaction payments, meaning they do not have to re-sign and resubmit the same transaction for each payment period. Loop achieves this by delegating the responsibility of executing recurring transactions from the end user to automated smart contracts, enabling automatic payment invocation.

The core features of Loop's automated payment product include:

• Webhooks that allow businesses to easily integrate cryptocurrency payments into their existing financial infrastructure;
• The ability for customers (not just the business's financial managers) to authorize recurring payments, enabling cryptocurrency-based subscription services, etc.;
• Automated error handling around transactions, including verifying whether transactions have been completed and resubmitting failed transactions;
• A powerful analytics platform that provides businesses with deep insights into their cryptocurrency payments and automatically aggregates transaction history, receipts, and other information.

Loop also allows users to automate recurring trades. This enables investors to easily implement dollar-cost averaging strategies and better manage their investment portfolios automatically.

Loop was founded by Elena Steinman and Shane van Coller, who previously co-founded the DeFi trading platform bloXroute. The project recently secured $4 million in seed funding led by Andreessen Horowitz, with participation from Alchemy Ventures, CoinList, and dozens of other angel investors.

It can be said that Loop is an important step towards the future, allowing companies to easily integrate cryptocurrency payments into their financial operations and accelerate the adoption of cryptocurrency as a legitimate payment channel.

Towards Mainstream Cryptocurrency Adoption

A key barrier for new users entering Web3 is complexity. For example, sending assets to an Ethereum account requires logging into one's MetaMask wallet; ensuring a connection to the correct network; entering the recipient's wallet address; signing and submitting the transaction; and verifying the transaction completion on Etherscan. Compared to the simplicity of sending money to friends on Venmo or paying rent from a bank account, today's cryptocurrency offers a user experience that is not very friendly.

Taking payments as an example, considering that a large portion of payments is often repetitive, such as rent, bills, salaries, subscriptions, etc. Completing the aforementioned workflow for each payment period is very tight, making cryptocurrency not a good choice for handling recurring transactions. From a business perspective, using cryptocurrency for recurring payments is even less acceptable, as businesses often have multiple partners that require weekly, monthly, or annual payments. To enter the mainstream, cryptocurrency must make these payment processes as easy as using traditional financial products on the blockchain.

What is Loop Crypto?

Loop Crypto is a cryptocurrency trading platform that allows organizations to automate recurring payments, effectively reducing the complexity of handling financial transactions on the blockchain. The project is working towards enabling companies to easily incorporate cryptocurrency transactions into their financial workflows.

What Can Loop Offer?

Loop's core product is similar to the automatic payment features of traditional banks; after a one-time "signing" approval, Loop users can automatically make subscription-based transaction payments, meaning they do not have to re-sign and resubmit the same transaction for each payment period. Loop achieves this by delegating the responsibility of executing recurring transactions from the end user to automated smart contracts, enabling automatic payment invocation.

Loop also abstracts all the technical complexities of on-chain smart contracts and off-chain tools, greatly simplifying the process of integrating cryptocurrency payments into existing products behind a set of easy-to-use webhooks. Particularly for cryptocurrency-native businesses, which often take the form of DAOs with multi-signature managed treasuries, Loop makes establishing sustainable financial workflows very easy, eliminating the overhead of having every key stakeholder sign each transaction.

On top of its core automated payment functionality, Loop provides its users with several additional benefits, including:

• Allowing customers, not just the business's financial managers, to authorize recurring payments, enabling cryptocurrency-based subscription services, etc.;
• Verifying whether transactions are successful, retrying payments, saving transaction receipts, and sending reminders;
• Providing powerful payment insights through Loop's analytics dashboard, enabling businesses to easily grasp their financial status and track transactions.

Loop also allows users to automate recurring swaps, meaning Loop trades on their behalf regularly with their chosen AMM. Additionally, Loop plans to allow AMMs like Uniswap and Balancer to directly integrate their front ends with Loop's recurring swap smart contracts, meaning users of these products can easily utilize Loop's automated trading.

Loop has also invested significant effort in security to ensure that their automated smart contracts are not exploited; that is, only the counterparty company of the transaction can receive the assets sent by the user, and the contract itself does not have a "superuser" privilege that could be used to empty wallet balances.

Final Thoughts

Loop makes it easier than ever for businesses to automate recurring cryptocurrency transactions by delegating the steps of executing transactions from the end user to smart contracts. Businesses can easily integrate with Loop's webhooks, set up recurring payment workflows, and isolate all the technical complexities of automated smart contracts and off-chain blockchain gateways from their tech stack. Furthermore, Loop provides businesses with automated error handling around payments and powerful insights into their payment history, enhancing the motivation to transition their financial workflows onto the blockchain. In summary, Loop is an important step towards the future, allowing companies to easily integrate cryptocurrency payments into their financial operations and accelerate the adoption of cryptocurrency as a legitimate payment channel.