API Trust assumptions

We believe in a decentralized, interoperable future - one where users are in control of their assets and applications compete on customer experience, not data silos. We built Loop to uphold this vision.

At its core, Loop is a relayer. The Loop protocol and keeper network process payments as defined by end-applications and are upheld by a Loop smart contract. The smart contract is controlled by the end-application.

Trusting applications

Loop allows for users to authorize automatic payments from an application of their choosing. This authorization can be for paying for a good or service whose details are agreed to and enforced by contracts living off-chain (e.g. terms of service), on-chain (e.g. smart contract), or somewhere in between. In all these cases, Loop preserves the trust assumption already present when agreeing to goods and services with the end application.

For example, if a user is agreeing to access data from a node service provider like Alchemy, the end user is trusting that the provider will bill them in accordance with any contractual agreement that may exist (e.g. a terms of service). This mirrors the trust assumption in web2 (e.g. providing your credit card) but with the additional security of the allowance function (noted below).

Furthermore, the end user has the superior benefit of visibility into such agreements. Because the authorization lives on-chain, users can always have full visibility. For ease, we built a customer dashboard so users can easily see, manage, and restrict access to applications, but any application could be used to view the on-chain data. This is interoperability at its core.

This trust assumption is true even for applications that build on top of decentralized protocols (e.g. Uniswap Labs building on the Uniswap protocol). These applications are often built by companies that have their own terms of service and who compete on providing a superior product experience for interacting with a decentralized protocol. This is in line with a future where applications compete on providing the best user experience and not on data silos. Anyone can enable autopay for a decentralized protocol.

User control

Web3 enables a superior trust mechanism to end users, while preserving agreements between a company and the end user. This is true regardless of whether that company is simply using crypto payment rails or offering an application built on top of a decentralized protocol.

Unlike with traditional payment rails, web3 allows for users to always be in control of their assets. This is done by increasing / decreasing the payment allowance. Users can reduce their wallet's allowance with the Loop smart contract to 0 - effectively making it impossible for Loop to process a payment because we simply do not have authorization. Conversely, users can limit the maximum amount the Loop contract can ever touch - be it authorized or unauthorized through a malicious attack - by setting the allowance to a specific amount (e.g. 500 USDC). This cumulative amount is reduced as users interact with the contract. The allowance function sits on the token, not the Loop contract, and thus can never be tampered with or removed by Loop. It is inherent in the ERC-20 token standard.