x402 protocol dissection: the underlying logic and ecological panorama of AI payment

In the HTTP protocol, there is a status code 402, which was established in 1997, meaning “Payment Required.” However, because there was no suitable payment method at that time, this feature has remained unused for nearly thirty years.

The situation is different now. Stablecoins have matured, Layer 2 has reduced transaction fees, and more importantly—AI Agents have become popular, and they need to pay real money for services. A leading exchange has seized this opportunity to reactivate the “dusty” button and has created a protocol called x402: when AI or users access paid content, they can pay directly on the chain without registration or jumping pages.

It sounds like an “automatic payment” feature? In fact, behind it is a whole ecosystem that is being rebuilt. From the underlying protocol standards, to the intermediate infrastructure, and to the top application products, x402 may rewrite the payment logic of the internet.

So besides the plethora of Meme coins, what are the actual protocols, public chains, infrastructures, and applications that are really making progress in this space? Let's break it down layer by layer.

Protocol Layer: Let AI Learn to “Dig Money”

The protocol layer of x402 is not a standalone standard, but a collection of modules pieced together to solve three core problems: how AI communicates with each other, how to pay, and how to establish identity and trust.

The most core aspect is of course the x402 protocol itself. It is designed based on the HTTP 402 status code, and when AI accesses paid content or APIs, a payment request is automatically received, followed by an on-chain transfer using stablecoins like USDC. There is no need to register an account throughout the process, nor will it redirect to another page.

AI needs to collaborate and work together, and there must be communication standards. Google proposed the A2A protocol (Agent-to-Agent) to standardize how agents communicate and hand over tasks. Anthropic also launched the MCP protocol to enable AI to access various tools and data sources. Building on the MCP, Google released the AP2 payment protocol, allowing AI agents to call services on demand and automatically complete payments, while being compatible with traditional payments and x402.

For these protocols to truly operate, the key relies on Ethereum's EIP-3009 extension. It allows users to authorize token transfers through signatures without having to pay gas fees—this solves the awkward issue of “no ETH in the AI wallet.” Additionally, there is the ongoing ERC-8004, which establishes an on-chain identity and reputation system for AI agents, recording execution history and trust scores to help service providers assess the reliability of the agent.

To summarize: the x402 protocol layer is building a “language + currency + trust” system specifically for AI. Without human intervention, AI can complete transactions, collaborate, and make payments. This is the first step in whether the entire ecosystem can get moving.

Infrastructure Layer: Making Payments Truly Run

The protocol defines the rules, but what really makes it work is the underlying infrastructure. Verifying requests, completing payments, coordinating services, connecting AI and on-chain.

Cloudflare plays a key role here. As a global cloud platform, it, along with a leading exchange, initiated the x402 Foundation, integrating the protocol into its own CDN nodes and development tools. Cloudflare not only provides a global distribution network but also supports a “pay-as-you-go” delayed payment mechanism, allowing AI Agents to smoothly access content before settling payments.

The second is x402 Facilitator, which is a payment aggregator (a general term for a type of project). They help AI agents complete the entire on-chain process of “payment on behalf, settlement, broadcasting”. Users or AI only need to initiate an HTTP 402 request, and the Facilitator will pay the Gas, package the transaction, and complete the on-chain broadcasting on their behalf. The settlement process uses the EIP-3009 standard, allowing for a one-time authorization of USDC deductions. The entire process does not require the AI to hold tokens or manually sign, greatly simplifying on-chain interactions.

According to the data, a certain leading exchange remains the largest facilitator, processing over 1.35 million transactions and covering 80,000 buyers. PayAI ranks second, being quite active on chains like Solana and Base, with a total trading volume of $280,000, and the number of users even surpasses that of a certain leading exchange. Others like X402rs, Thirdweb, and Open X402 are also competing for market share.

In addition to the Facilitator, a “native settlement blockchain” specifically designed for x402 has emerged. A representative project is Kite AI, which, as one of the first Layer 1 blockchains to fully embed the x402 payment primitives into the underlying architecture, has already received support from leading exchanges' venture capital, PayPal Ventures, and other institutions. It does not directly handle payment verification (not a Facilitator), but provides an execution and settlement environment for x402 transactions, supporting agents to automatically initiate, receive, and reconcile on-chain payments through standardized authorization commands.

On the execution level, in addition to the native chain Kite AI specifically designed for AI payments, Peaq in the DePIN field also plays a key role. Peaq is a public chain focused on machine economy, which has natively supported the x402 protocol, allowing automatic payments and settlements between devices and devices, as well as between agents and agents.

The representative project of the x402 collaboration layer is Questflow, where developers can publish agent tasks, set prices, and complete on-chain settlements directly through x402. It has already collaborated with Virtuals and a leading exchange.

In addition, there are projects like AurraCloud and Meridian that provide multi-chain settlement and custody services for the x402 protocol.

In simple terms, the infrastructure layer of x402 is being built around three core issues: how to send requests, how to securely receive payments, and how to quickly land on different chains. This determines whether the entire payment system can really operate.

Application Layer: Who is really using x402?

The protocol and infrastructure are set up, but we still need to see if the application layer has taken off. To be honest, there are very few projects that have been implemented at the moment.

• Daydreams: is building an LLM inference platform that uses x402 for payment.
• Heurist Deep Research: A Web3 native AI research platform where users pay in USDC per query, automatically generating multi-page research reports.
• Gloria AI: Achieve pay-per-use news with x402.
• Snack Money API: A micropayment interface for X, Farcaster, etc., focused on small payments and tips around identity and social interactions.
• tip.md: Allow the AI assistant to directly help users complete cryptocurrency tips in the chat interface, with USDC tips going through the full payment process via MCP+x402.
• Firecrawl: A web scraping and cleaning API that transforms websites into data usable by LLMs, with pay-per-call through x402.

Overall, the application layer of x402 is still in the exploratory stage. The functional platform has just started and has not yet formed a scale effect. It depends on who can first create a truly usable, payable, and reusable product.

Meme Craze: Price and Popularity Fluctuations Are Severe

With the rising popularity of concepts related to x402, a number of “narrative-surfing” native Meme projects quickly emerged in the market. Among them, the most representative is PING, which was issued on the Base chain. On the day of its launch, its market capitalization quickly surpassed ten million dollars.

In addition to PING, “PENG” and “x402” type tokens have also emerged in the community. These Meme tokens do not currently constitute the core of the protocol, but they can provide attention, popularity, and early liquidity.

What issues does x402 still face from protocol to implementation?

Although the concept of x402 is eye-catching, there are still many practical issues to address before it can be truly implemented.

First, there is a lack of truly usable products. Currently, most projects are still in the testnet and proof-of-concept stages, and the user experience is quite rough.

Second, the technology stack is complex and integration costs are high. x402 involves a new protocol that integrates multiple modules such as payment, signature transfer, and proxy communication, which presents a higher threshold for developers.

Third, compliance risks. The focus on “no accounts, no redirect payments” is efficient, but it bypasses the KYC/AML requirements of traditional payment systems, which may pose regulatory risks in certain regions.

Fourth, the network effect has not yet formed. The core of the payment protocol lies in ecological synergy, but currently there are not many services and platforms accessing x402, and the ecosystem has not yet formed a self-circulation.

In summary, x402 is still some distance away from “mass adoption”. There are multiple hurdles that need to be overcome from technology to real-world implementation.

Where are the participation opportunities?

From the perspective of participation, the long-term opportunities for x402 lie more in the layout of infrastructure and key platforms.

First, there are the base chains and infrastructure. The x402 core relies on Ethereum ecosystem standards such as EIP-3009 and ERC-8004, while Base is currently the main landing chain, with a strong stablecoin closed loop and a developer-friendly environment, expected to incubate leading products first. Solana also has advantages in high-frequency payments, making it suitable for Agent micro-trading scenarios.

Next is the native settlement blockchain Kite AI, as well as payment aggregators and service platforms, such as PayAI, Meridian, and AurraCloud. They are responsible for verifying payments, covering Gas, and integrating APIs. Once a universal entry point is formed, the value will rapidly amplify.

Regarding the token side, it's best to be cautious. Currently, the market cap of x402-related tokens is small and volatile, and many Meme coins are still in the narrative-driven stage. Projects that truly have payment implementation or platform utility are more worthy of attention.

How do KOLs view it?

In the current situation where market voices are diverging, the views of some frontline Builders and KOLs on the x402 ecosystem are also worth paying attention to.

Haotian pointed out that the current x402 craze is mostly driven by Meme hype, but the real “main course”—the implementation of technology and the formation of the ecosystem—has yet to begin. Only through market selection will high-quality projects emerge. He believes that those who view x402 as a short-term speculation have misunderstood the logic and rhythm of the entire track.

Laobai points out from a historical perspective that micropayments are not a new concept. From the early Bitcoin and Lightning Network to Nano, IOTA, and BSV, the cryptocurrency community has made multiple attempts to promote small transaction applications, but has always struggled to implement them on a large scale. The difference with x402 is that it has finally found the true “subject” that needs micropayments: AI Agent, instead of human users.

Danny raised the perspective higher, pointing out that the greater potential behind x402 is the payment infrastructure of the “machine economy”. From on-chain knowledge collaboration, API economy to AI-driven DAO governance, all these M2M (machine-to-machine) transaction demands inherently require a frictionless, account-free, and automatically executable payment layer.

Blue Fox Notes believes that the Facilitator, as a key link in payment verification and execution, is becoming one of the core infrastructures in the industry from an architectural perspective. Projects like PayAI, a leading exchange, and Pieverse have already formed a clear competitive landscape.

Finally, Zhixiong Pan raised a long-term perspective question: Can an Agent truly “hold assets and pay”? This involves key mechanisms such as private key custody and permission management.

In summary, x402 may currently experience fluctuations in popularity, but in the eyes of long-termers, it has just entered a real construction period.