Is x402 the future of AI payments or a speculative bubble? Market capitalization soars to 800 million USD, experts debate the risks.

x402 Token enables accountless, instant transactions across Blockchains using stablecoins like USDC, redefining the AI payment standard. With the support of Cloudflare and a16z, the x402 ecosystem achieved a volume of 1.38 million transactions in October, with a transaction amount of 1.48 million USD, and a market capitalization soaring to nearly 800 million USD, with daily transaction volumes exceeding 230 million USD.

What is x402: The Blockchain Rebirth of HTTP 402 Status Code

x402 is not a typical Token; it is an open payment protocol designed for AI agents and APIs, allowing them to perform automated transactions without the need for accounts, registrations, or API keys. The name “x402” comes from the HTTP status code 402 - “Payment Required”, a classic web standard that is now reimagined to convert any web request into instant payment transactions using stablecoins like USDC on any Blockchain.

HTTP status code 402 has existed since the release of the HTTP/1.1 standard in 1997, but it has never been widely implemented. It was originally designed as “reserved for future use,” intended for digital payment systems. Nearly 30 years later, the x402 protocol has finally given this dormant status code a true life, transforming it into the payment infrastructure of the AI era.

The core innovation of x402 lies in eliminating the friction of traditional payments. In the traditional model, API providers need to establish account systems, manage API keys, and handle subscription billing and refund disputes. For AI agents, this model is extremely inefficient because each request can come from different agents, different users, and different use cases. x402 integrates payment into the protocol layer, allowing each HTTP request to include instant cryptocurrency payments without the need to establish any prior relationships.

This “pay-per-use” model is particularly important for AI agents. When an AI agent needs to call a weather API, translation service, or data analysis tool, it does not need to register an account or bind a credit card in advance; it only needs to include payment with the request. This frictionless payment experience allows AI agents to make autonomous decisions and conduct transactions without human intervention.

The US-compliant crypto exchange partners with Cloudflare to drive ecosystem explosion

(Source: a16z)

This wave of financing stems from a series of significant events that have occurred in recent months. In September, the compliant cryptocurrency exchange in the U.S. and Cloudflare officially launched the x402 Foundation to promote the integration of the protocol with the Agents SDK and Model Context Protocol (MCP). This enables AI agents to handle flexible payments, from micropayments of less than a cent to deferred payment agreements, while resolving disputes and aggregating invoices for data scraping agents.

The participation of compliant cryptocurrency exchanges in the United States is strategically significant. As the largest compliant cryptocurrency exchange in the United States, it has a vast USDC liquidity and a mature payment infrastructure. By promoting the x402 standard, this exchange is effectively building “toll booths” for the future AI economy, where each AI agent transaction may be settled using USDC, significantly enhancing the use cases and liquidity demand for USDC.

The involvement of Cloudflare is equally crucial. As the largest CDN and web security service provider in the world, Cloudflare handles trillions of HTTP requests every day. If the x402 protocol can be integrated into Cloudflare's infrastructure, it means that millions of websites and APIs globally can easily support automated payments for AI agents. This scale effect will enable x402 to quickly become the de facto standard.

Subsequently, in October, the venture capital fund a16z reevaluated Gartner's prediction that by 2030, machine customers will directly influence or participate in purchases worth $30 trillion. a16z emphasized the importance of collaboration between x402, AI agents, U.S. compliant cryptocurrency exchanges, and Cloudflare. a16z reported: “Protocols like x402 are becoming potential financial pillars for autonomous AI agents, helping them conduct small transactions, access APIs, and settle payments without intermediaries—Gartner estimates that by 2030, this economic scale could reach $30 trillion.”

What does 30 trillion USD mean? It is equivalent to one-third of the global GDP, exceeding the total GDP of China and the United States. If x402 can capture even 1% of the volume, it would represent a market worth 300 billion USD. This grand narrative has attracted a large influx of speculative capital into the x402 ecosystem.

1.38 million transactions and explosive growth of 800 million USD market capitalization

(Source: x402scan)

These announcements have injected strong momentum into the entire x402 ecosystem. According to data from x402scan, since the U.S. compliant cryptocurrency exchange launched in May, the ecosystem has recorded 1.38 million transactions, with a transaction volume of 1.48 million USD, over 72,500 buyers, and more than 1,000 sellers. Although these numbers may not seem large in absolute terms, the growth rate is astonishing, indicating that x402 is transitioning from the proof-of-concept stage to the practical application stage.

(Source: CoinMarketCap)

Investor interest has also increased significantly. The x402 category on CoinGecko surged 350% within 24 hours, reaching a market capitalization of nearly 800 million USD, with daily volume exceeding 230 million USD. Leading projects in trading activity include EigenCloud (formerly known as EigenLayer), Ping, and PayAI Network. Each of these projects plays a different role in the x402 ecosystem, ranging from infrastructure to specific application scenarios.

x402 Ecosystem Core Project:

EigenCloud: Provides decentralized computing resources, AI agents can pay with x402 to use cloud computing power.

Ping: Focuses on communication and coordination between AI agents, using x402 to handle cross-agent transactions.

PayAI Network: Build a payment network dedicated to AI agents, optimizing micropayment efficiency.

Investor Ryan Adams predicts: “If x402 succeeds, it will fundamentally change the business model of the internet.” This optimistic sentiment reflects the market's huge expectations for AI payment infrastructure. However, based on 1.38 million transactions and a transaction volume of 1.48 million USD, the actual usage scale of x402 remains small, with a significant valuation bubble compared to its market capitalization of 800 million USD.

Experts Debate: Revolutionary Infrastructure or Speculative Bubble?

Experts still have differing opinions, but most are optimistic about the long-term potential of the x402 Token. Supporters believe that the advantage of x402 lies in its ability to simplify and standardize the payment process for AI agents. Traditional payment methods are slow, prone to refunds, and require manual intervention. In contrast, x402 uses cryptocurrency to enable instant, trustless payments between AI agents and API providers.

Others emphasize that the current market capitalization of the x402 Token is relatively low, indicating strong upward potential. “These are the Tokens of x402 currently on CoinGecko. The Token with the highest market capitalization is slightly above 50 million USD. Most Tokens have a market capitalization of less than 10 million USD. Their upward potential is absolutely incredible,” said investor Otto Suwen.

However, the risks are far from negligible. Jarrod Watts, the builder of Abstract, categorizes the x402 tokens into three types: API tokens that require payment in local currency, service provider tokens used for paying service fees, and speculative tokens with no actual value—similar to the early “Artificial Intelligence Coin.” Watts warns that the community may promote trend-driven tokens to inflate prices without any real utility.

“I estimate that in the coming weeks we will see a wave of new artificial intelligence coins emerge to boost this trend. Moreover, they may be completely meaningless, but 'would you rather be right or would you rather be rich?'” said Jarrod Watts. Analyst 0xJeff also referred to them as “x402 memecoins” and pointed out that only projects with real or near-commercial products are likely to survive in the long term.

More importantly, the protocol is still new and untested in terms of security. In April of this year, BeInCrypto reported a serious vulnerability affecting x402 and other Crypto-MCP (Model Context Protocols). This vulnerability could allow hackers to expose seed phrases or reroute blockchain transactions without the user's knowledge through LLM-based operations. Although the vulnerability has been patched, it highlights the potential risks of combining AI with cryptocurrency payments.