Reflections on the Coinbase and Shopify partnership
Coinbase and Shopify recently unveiled a new crypto payments protocol, an effort that’s attracted a lot of attention from investors and builders alike. It’s exciting to see infrastructure being built that treats payments as more than a one-click transaction. In many ways, this protocol reflects something we at Loop have been thinking about for years: the hardest parts of payments happen before and after the money moves.
Whether it’s inventory management, refunds, or preventing race conditions during high-demand events (hello Taylor Swift ticket sales), the reality is that getting paid is about more than just sending money.
The new protocol takes a decentralized approach towards solving this. It introduces an escrow-based architecture, where funds are held in a contract and merchants can program rules around withdrawals, refunds, and settlement logic. It’s designed to be flexible and forward-compatible, with support for multiple wallet types via "token collectors" that can evolve as the ecosystem does.
We appreciate the thoughtfulness here. As payments infrastructure, this is clearly a public good, pushing the conversation forward around how onchain commerce can scale.
But it also raises a few questions we’ve spent years grappling with at Loop Crypto.
Do All Operational Problems Need to Be Solved Onchain?
Our view is: not always. In fact, many of the operational hurdles that the protocol addresses, like inventory tracking or queuing systems, are really hard problems to solve that Web2 has purpose-built solutions for. Trying to replicate those systems onchain adds complexity (think gas fees, waiting on block confirmations, contract calls, event listening, and questions about custody of funds).
The hard part about building a protocol is designing it to last. Coinbase has a clever design that solves for "what if there are other ways that wallets interact on-chain" by making wallet approval mechanisms flexible. But this assumes that wallet approval is what will change—when it could be something else entirely that the protocol didn't contemplate, like swaps before settlement or cross-chain bridging for off-ramping.
Building software is extremely difficult, even when you own the entire stack. Building software that's fixed, globally used, and decentralized is exponentially harder. Protocols should only be used when those constraints are features rather than drawbacks, or when the pain is worth paying for a much grander goal.
Where we do see clear value of onchain infrastructure is related to how information about a payment is stored, shared, and accessed. Today, payment context is locked away—buried in merchant dashboards or disjointed email receipts. At Loop, we believe blockchains should be used to unlock transactional transparency: enabling both the merchant and the payer to access shared metadata, match invoices to payments, and streamline reconciliation across ecosystems. This use of blockchains - to decentralize data access and simplify data sharing - is one that blockchains have a competitive advantage in solving.
Designing for the Realities of Merchants
The protocol’s architecture likely makes assumptions about the scale and internal logic of platforms like Shopify. For a small merchant that is looking to get started fast, the protocol is an appealing option - it solves some basic flows. However, for most merchants, as they grow, their payment operations become more complex. They start to require more bespoke solutions, demanding more control over the full customer experience and requiring products that fit in with the other tools they are using.
Stripe is a good example here. Their product suite of subscriptions, payment processing, and invoicing is wonderful for a startup looking to “get paid fast.” But as merchants grow, they start to layer on additional software that is purpose-built to solve just one part of their payment flow. The merchant might graduate to using a Churn Buster for receipts or an OpenMeter to calculate usage-based billing. For context, even the smallest companies (organizations with under 100 employees) use roughly 40 different SaaS applications on average. Eventually, the merchant grows so big that they start to bring this work in-house, building their own systems.
At Loop, we've focused on solving one thing really well: how to enable merchants to grow sales by supporting the fastest-growing new payment method - stablecoins. The result is a single API that integrates into existing payment systems and abstracts away the complexity of onchain recurring payments and settling in fiat or crypto.
Final Thoughts
What Coinbase and Shopify are doing is important: it signals that crypto payments are maturing, and that the infrastructure to support real-world use cases is finally being taken seriously.
Our take? We’re aligned on the goal, and we’re building in parallel, focused on a different slice of the problem: making payments easier to accept, easier to reconcile, and smarter at the metadata level.
Because the payment itself is just the tip of the iceberg. And we’re here to power everything around it.
