For investors, the x402 concept provides a clear narrative theme: payment infrastructure in the AI era.
Author: Deep Tide TechFlow
If you've been following crypto social media lately, you may have noticed a strange term appearing frequently: x402.
However, discussions around it are more prevalent on English crypto Twitter, while the Chinese community remains relatively quiet. This information gap often signifies new narratives and opportunities.
It all starts with Coinbase.
At the end of September, Coinbase announced the establishment of a foundation called x402 in collaboration with Cloudflare. The market reacted lukewarmly at the time, as Coinbase frequently releases various protocols and tools.
If you're not familiar with Cloudflare, a simple explanation is that this company controls over 20% of the global website traffic entry points and is a core player in internet infrastructure.
It rarely ventures into the crypto space, let alone collaborates with crypto companies on protocols.
In mid-October, Visa also announced its support for the x402 standard. As the world's largest payment network, its choice to support the standard proposed by Coinbase was interpreted by the market as a positive sign for greater mass adoption.
From Cloudflare to Visa, from internet infrastructure to traditional payment networks, the x402 protocol led by Coinbase seems to be connecting two worlds.
Looking at the early participants of x402, this feeling is even stronger. Tech companies like Google, AWS, and Anthropic (the parent company of Claude AI) are all involved. More notably, a large number of AI-related projects have begun to announce their integration of x402, including several AI agent platforms.
So, the situation is that Coinbase has created a payment protocol, traditional payment giants and tech companies are joining in, and AI projects are starting to cluster around integration.
Is the market brewing a new narrative? If so, who will be the biggest beneficiary?
HTTP 402, the unfulfilled payment dream of the internet
To understand why x402 is important, one must first grasp a fact that most people are unaware of: there has always been a "payment" function in internet protocols, but it has never been activated.
In 1997, when the HTTP/1.1 standard was established, engineers defined various status codes to correspond to certain situations or functions that might arise on the internet.
For example, the more familiar 404 is often used to indicate "page not found," while 200 represents "request successful," just not visible to you.
The 402 status code was defined by early engineers as "Payment Required."
However, this 402 has never been officially used and has remained in a reserved state. The reason is quite simple: at that time, the internet lacked suitable payment methods.
Using credit cards? It required a complex merchant system to interface with the internet; using PayPal? That would also require a corresponding account system to be established.
Thus, the internet of that time took another path, the advertising model. The rise of Google and Facebook was essentially due to the internet's lack of native payment capabilities.
Over the past 30 years, there have been attempts to activate 402. But each time, they failed due to technical limitations. Until now, as crypto payments gradually gain acceptance, the conditions seem to be maturing:
First, there are native stablecoins on public chains, such as USDC, which theoretically can make payments as simple as sending an email; second, Layer 2 solutions are reducing transaction costs. On Base or Polygon, a transaction costs only a few cents.
Finally, and most crucially, the explosion of AI has led to the emergence of various agents, potentially creating a real demand for using the internet for payments.
For instance, if I want my AI assistant to call another AI's translation service, costing $0.01. In the traditional payment system, this transaction would be impossible or would require mobilizing more resources and opening more channels.
This is the origin of x402. Coinbase has developed a complete payment protocol based on the HTTP 402 standard. It is not reinventing the wheel but attempting to realize the potential of the 402 status code.
Through the x402 protocol, when an AI accesses a paid API, it will receive a 402 status code and a payment request, and then automatically complete the payment using USDC, with the entire process requiring no human intervention.
This may also explain why Cloudflare and Visa are participating.
They see not just the crypto protocol itself but the opportunity to reconstruct the internet payment layer. When payments become as simple as HTTP requests, there is room for changing the entire internet business model.
API economy, content payment, AI service market—these areas could explode because of x402. The companies and projects that position themselves early will gain a significant first-mover advantage.
x402, using crypto to facilitate payments
The technology behind x402 sounds complex, but the core logic is quite simple. Understanding how it operates allows one to grasp the investment opportunities behind it.
Let's look at how a typical x402 transaction is completed.
When a user or AI accesses a paid resource, the server returns a 402 status code, simultaneously informing them: this service costs 0.1 USDC, please pay to this address.
The client, upon seeing this, automatically initiates a USDC transfer.
The server confirms receipt of the payment and immediately provides the service.
How does this differ from traditional payments?
Traditional payment gateways require you to register an account, link a bank card, and go through various verifications. Each transaction must pass through banks, card organizations, payment companies, and other intermediaries, with the fastest settlement taking T+1. Transaction fees typically range from 2-3%, plus various hidden costs.
x402 is completely different. There is no account system, no registration required; anyone with a wallet or AI can pay directly. Payment equals settlement, and the payee can receive the money within seconds (depending on the chain used). Most importantly, there are zero fees at the protocol level.
You might ask: how can they make money with zero fees?
This is the aspect of x402 that benefits the crypto ecosystem, or rather, benefits Coinbase.
The x402 protocol itself does not charge fees, but platforms using the protocol can charge fees. For example, Coinbase, as a payment service provider, can collect small service fees. The Base chain processes transactions and charges extremely low gas fees. This model allows the entire ecosystem to profit rather than being monopolized by a single platform.
Cross-chain compatibility is another highlight. x402 does not limit which chain to use; Base, Polygon, and Solana are all options. This means users can choose the cheapest and fastest chain for payments based on different chain conditions.
In the envisioned x402 system, AI is no longer just a tool but an economic entity with payment capabilities. They can purchase computing power, data, and services from other AIs, forming a brand new agency economy.
In fact, the technical details are not what matters; what matters is what these features imply: lower costs, faster speeds, and a larger market. When payment friction approaches zero, previously impossible business models become feasible.
This may explain why not only crypto companies but even traditional giants like Visa are getting involved.
Which targets are worth paying attention to?
For us, x402 signifies not only an update at the technical level but also potential investment opportunities. The list of participants in x402 may be the best indicator of the protocol's prospects.
First, let's look at the three giants in the infrastructure layer.
Coinbase (stock code: COIN) is the initiator, with the most direct motivation.
As the largest crypto exchange in the U.S., it has been seeking sources of income beyond trading. x402 allows Coinbase to transform from an exchange into a payment infrastructure provider. Every x402 transaction could go through the Base chain, and every USDC payment strengthens its ecological position.
If x402 truly becomes widespread, Coinbase could become the Visa of crypto payments.
Cloudflare (stock code: NET)'s involvement also has its own considerations.
This company controls 20% of global website traffic but rarely ventures into the financial sector. Why now? The answer may lie in AI.
Cloudflare recently launched the Workers AI platform, and if websites can directly charge AI through x402, Cloudflare will control a massive AI service market.
Visa (stock code: V) appears to be employing a combined offensive and defensive business strategy.
Defensively, it aims to prevent its payment network from being marginalized by crypto payments, while offensively, it seeks to seize the initiative in AI payments. Visa previously launched a protocol called TAP, which is now interoperable with x402.
Specifically, TAP (Trusted Agent Protocol) is a payment protocol designed specifically for AI agents. In the future, AI can use both the traditional Visa network and crypto payments simultaneously. An AI assistant could use your credit card to buy a plane ticket while also using USDC to purchase services from another AI.
Now, looking at crypto projects, this is where the investment opportunities are most concentrated.
- @AEON_Community AEON
Launched an AI Payment infrastructure that allows AI agents to autonomously search, shop, and pay using cryptocurrency. It collaborates with mainstream blockchains like BNB Chain, Solana, TON, and TRON, and won the BNB Chain Demo Day championship.
- @PayAINetwork PayAI Network
Built a global, always-on marketplace that allows AI agents to hire and work with each other, constructed using open-source technologies like libp2p, IPFS, ElizaOS, and Solana. Recently, two ElizaOS agents completed the first fully autonomous contract negotiation, signing, delivery, and payment in history.
After supporting x402, AI agents can charge on demand, truly achieving commercialization.
- @daydreamsagents Daydreams
A composable context AI framework designed for executing on-chain tasks, allowing AI services to transact through micropayments.
- @GoKiteAI KITE AI
Building the infrastructure for the agent internet, a system that enables autonomous agents to independently authenticate, transact, and operate in real-world environments.
In September of this year, KITE raised $18 million in Series A funding, co-led by General Catalyst and PayPal Ventures. Their AIR (Agent Identity Resolution) system provides AI agents with verifiable identities and programmable payment channels.
- @questflow Questflow
The orchestration layer of the multi-AI agent economy, coordinating global AI agents to autonomously execute tasks and earn rewards on-chain. After integrating CDP wallets and x402, Questflow has processed over 130,000 autonomous micropayments and integrated more than 30 third-party agents. They are collaborating with Circle to use USDC as the core settlement currency.
- @peaq Peaq
Peaq announced support for the x402 protocol, enabling its builders on-chain to utilize x402 for machine-to-machine (M2M) and agent-to-agent (A2A) payments. As a Layer-1 blockchain designed specifically for DePIN (Decentralized Physical Infrastructure Networks), peaq has already connected over 850,000 machines, robots, and devices, and is frequently mentioned in the robot X crypto narrative.
There are also some projects that, while not currently issuing tokens, are worth close attention. For example, Firecrawl provides web data scraping APIs and is preparing to charge per use with x402. Pinata, the largest IPFS service provider, plans to enable x402 payments for storage services. Once these projects issue tokens, they could likely become new hotspots in the x402 concept.
Due to space limitations, not all potentially benefiting projects are listed here; you can click here to view the complete project list from another well-known science communicator, @eli5_defi.
Overall, if you want to bet on this narrative, at least three clear investment lines can be seen from the participants in the protocol:
First, infrastructure beneficiaries, with Coinbase at the forefront.
Second, the AI agent track, especially the projects that have announced integration.
Third, the Base ecosystem, which has become the main battleground for x402.
Finally, for investors interested in this narrative, you need to know that x402 is not the only solution.
The Lightning Network's L402 protocol is also attempting to activate HTTP 402, but based on Bitcoin rather than stablecoins. Google's AP2 protocol, while supporting x402, is also developing its own payment standard.
If large tech companies decide to launch their own payment protocols, x402 may face fierce competition.
However, 402 has two key advantages: first mover and ecosystem. The combination of Coinbase, Cloudflare, and Visa, along with the early adoption of dozens of AI projects, has already formed a preliminary network effect.
For investors, the x402 concept provides a clear narrative theme: payment infrastructure in the AI era.
Whether betting on infrastructure (Coinbase, Base ecosystem) or application layer (various AI agent projects), the core logic is the same: betting on the imaginative space of the new AI economy.
If you believe AI agents are the future, then their payment needs are a necessity. And x402 may be the best crypto answer to meet that demand currently.
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