The story of the x402 Foundation: From promoting the x402 protocol to AI payments

Author: Chain Revelation

How a Forgotten Status Code Leverages a Trillion-Dollar Market.

Imagine your AI assistant wants to check today's stock price, but it's stuck at a paywall—no credit card, no account, and doesn't even know how to pay. It sounds like science fiction, but in 2025, it's already a reality.

The solution to this problem is a payment revolution designed specifically for AI agents to "buy things on their own"—the x402 protocol.

The x402 Foundation, a neutral organization backed by giants like Coinbase and Cloudflare, is the one that turned this “golden key to AI payment” from theory into reality.

1. From dusty archives to popular protocol: the “archaeology” of x402

HTTP 402: The “Unfinished Symphony” of the Internet

The story begins in 1999. At the time, the HTTP/1.1 specification defined a status code called "402 Payment Required," meaning, "Hey, this resource requires payment." The problem was, no one knew how to securely and conveniently collect payments online, so this status code, like a blank check, sat unused for over two decades. The best innovations often don't come from inventing something completely new, but from revitalizing old components in new environments. It wasn't created out of thin air; rather, it cleverly resurrected the dormant HTTP 402 status code. This "forgotten tool" has found its destiny in the AI ​​era. The protocol's workings can be understood using an everyday scenario: AI requests a service: An AI assistant wants the latest weather data. Server requests payment: The API server returns a 402 code, saying, "Yes, but please pay $0.001 first." AI automatically pays: The AI ​​assistant immediately sends a micropayment in a stablecoin via a blockchain like Base. Service completed: The server confirms payment and immediately returns the data. The entire process is automated and completed in seconds, with no redirects, no logins, and virtually no fees. This fixes the internet's "payment flaw," allowing value to flow as freely as data. It's the perfect match for AI agents that need to conduct massive, high-frequency, micro-transactions. Why is it suddenly so popular now? Because it's a payments revolution for the machine economy, and the x402 protocol is at the center of it. Currently, industry trends are driving the rise of the machine economy. This week, the crypto arm of venture capital firm a16z stated in its latest State of Crypto report that autonomous transactions could reach $30 trillion by 2030. The Coinbase development team also noted that AI agents are ushering in a new era for the machine economy: without human intervention, AI agents can autonomously complete everything from payments to data storage. These trends make the x402 protocol a prime candidate for solving payment problems. Coinbase + Cloudflare: A match made in heaven or a marriage of convenience?

In September 2025, two seemingly unrelated giants came together:

• Coinbase: One of the world's largest cryptocurrency exchanges, it controls the infrastructure for stablecoin payments

• Cloudflare: A CDN giant that provides services for 20% of the world's websites and controls key nodes of Internet traffic

Why these two? Coinbase has payment capabilities but lacks a distribution network; Cloudflare has a global network but requires a new business model. x402 perfectly complements the strengths of both: Coinbase provides blockchain payment technology, and Cloudflare provides a global edge computing network, together building the infrastructure for the "machine economy."

Core Team: Web2 + Web3 Integration

The x402 Foundation adopts an open governance model, and its core members include:

1. Dan Kim (Vice President of Business Development at Coinbase): Responsible for strategic cooperation and ecosystem construction

• Core Value: "Super Connector" in the traditional financial world

• Resume Highlights: He has led global payment strategies at giants such as Visa and Airbnb and has extensive experience in institutional cooperation

• Strategic Significance: Open the door to traditional financial institutions for x402, ensuring compliance paths and mainstream adoption

2. Erik Reppel & Nemil Dalal (Coinbase): Co-author of the x402 white paper

• Division of labor and collaboration: Erik is responsible for technical architecture design, Nemil focuses on product strategy and compliance docking

• Core contribution: Co-author of the x402 white paper, built a complete "technology-market-regulation" trinity framework

• Unique advantage: The combination of the two covers the entire chain from underlying technical standards to market implementation, providing the project with dual technical and market guarantees.

3. William Allen (Cloudflare): Providing network infrastructure support

• Technical support: Top global network infrastructure experts, providing enterprise-grade stability for x402

• Value: Cloudflare serves 20% of global website traffic, and its technical standards are endorsed by x402

• Strategic role: Ensure high availability and security of the protocol worldwide

Team chemistry: 1+1+1>3

Coinbase's compliance DNA × Cloudflare's infrastructure strength = the perfect entry point for traditional institutions

Team chemistry: 1+1+1>3

Coinbase's compliance DNA × Cloudflare's infrastructure strength = the perfect entry point for traditional institutions

• Promote standardization: Make the x402 protocol an official web standard of the W3C (World Wide Web Consortium).

• Build an ecosystem: Attract developers worldwide to build applications on x402 through funding, tools, and hackathons.

• Achieve decentralization: Ultimately, fully hand over the governance of the protocol to the community.

Delivering tangible results from code to ecosystem

The x402 Foundation is not an organization that talks about ideas, but one that does them. In just a few months, they've built a rich and diverse ecosystem: Representative projects include Questflow (AI agent orchestration), PayAI Network (cross-chain payments), and AurraCloud (AI agent infrastructure). Performance data: 524,000 transactions completed in the past 90 days, totaling over $520,000 USD, demonstrating rapid growth. Developer support: x402.org provides specifications and SDKs, while tools from Cloudflare and thirdweb support integrations with over 170 chains and 4,000 tokens.

Hackathons and bounty programs have attracted developers from around the world, and over 200 new projects have been incubated based on x402.

More importantly, the foundation remains neutral, ensuring that the protocol is open to everyone - whether you are a large company or an independent developer, you can freely extend it.

Entry of giants: from pilot projects to strategic cooperation

More importantly, there is recognition at the industry level:

• Google:Integrated x402 in its A2A and AP2 frameworks

• Visa:Launched payment solutions in conjunction with its Trusted Agent Protocol

• Circle:Provides USDC stablecoin support

• thirdweb: SDK supports 170+ chains and 4000+ tokens

What does this mean? It's no longer a niche experiment in the crypto world, but a serious investment by traditional tech and financial giants.

Third, Deep Thinking: Why x402 Could Change Everything

Economic Principles: The Power of Reducing Transaction Costs

Economist Ronald Coase once said that the fundamental reason for the existence of a business is to reduce transaction costs. x402 essentially does the same thing—it reduces the transaction cost of payments to near zero: Time cost: from minutes to seconds Cognitive cost: no registration, login, or password required Technical cost: developers can integrate with just a few lines of code Economic cost: only on-chain gas fees, no protocol fees When transaction costs are low enough, previously uneconomical transactions become feasible. This is why concepts like micropayments, pay-per-use, and autonomous transactions by AI agents suddenly become realistic.

Network Effect: The “Critical Mass” of Payment Protocols

A payment network has a characteristic: the more people use it, the greater its value. The cleverness of x402 lies in:

• Open Standard: Anyone can implement and extend it

• Multi-chain compatibility: Not bound to a specific blockchain

• Backward compatibility: Seamless integration with existing HTTP infrastructure

This design makes it easier for x402 to reach “critical mass” - when enough services support x402, services that do not support it will become lagging behind. IV. Challenges and Opportunities: A Reality Check The x402 Foundation's vision is vast, but the road ahead is not smooth. Challenges: 1. Applying for W3C National Standards: Becoming a global standard requires a lengthy negotiation process and the approval of international organizations like W3C. How difficult is this "pass"? Becoming an international standard is like applying for a Nobel Prize: it requires technical expertise, peer recognition, and a lengthy process. W3C standard development typically takes three to five years, involving proposals, drafts, testing, and community voting. 2. The Reality of Fierce Competition: Google is promoting the AP2 protocol (allowing bank cards and transfers to be embedded in AI applications like APIs), and new approaches like Model Contextual Payment (MCP) are emerging. The good news is that Cloudflare has built-in x402 support into its Agents SDK and MCP server, taking the first step toward multi-track interoperability. 3. Ecosystem Maturity: Despite rapid growth, the ecosystem remains in its very early stages. As a new protocol, the x402 ecosystem is still in its infancy. Coinbase provides a reference implementation and developer toolkit, but multi-party implementations and interoperability testing remain insufficient. To become an industry standard, x402 must attract more third-party developers and infrastructure providers and establish a comprehensive interoperability testing matrix. Opportunities: However, the opportunity is historic. With the AI ​​agent economy expected to reach $10 trillion by 2030, a native, decentralized payment layer is essential. x402 is well-positioned to become this core infrastructure. V. How to Participate in the X402 Ecosystem The Ecosystem page on the x402 protocol's official website provides an overview of the current ecosystem. Clicking through them one quickly realizes that this is still an early stage: many projects directly lead to technical documentation, while a significant number simply direct you to GitHub. In other words, the narrative comes first, while products and applications are still on the way. However, early stages don't mean there's no structure. The composition of participants has already revealed three clear capital lines: First, infrastructure builders: Coinbase is the most obvious beneficiary. It's not just a participant, but also a rule-setter and foundation-builder. Second, the first wave of "residents"—AI agent applications. This is especially true for projects that have announced integration. AI agent technology is a hot topic in the cryptocurrency space, and the x402 protocol has already attracted the attention of multiple AI agent projects. The integration of these projects will further promote the development and application of the x402 protocol. Third, site selection and neighborhoods—the Base ecosystem. It's no accident that x402 prioritized Base. Choosing a battlefield means choosing a growth curve: where developers gather often determines the path dependencies of toolchains, distribution, and mindset. Conclusion: From the Information Internet to the Value Internet The internet has spent three decades ensuring the free flow of information, but it has always been flawed in the flow of value. We're accustomed to free access to information, but when we need to pay, we're plagued by friction: registering an account, linking a bank card, remembering passwords, processing refunds... x402 aims to change this reality. It makes payments as easy as sending an email, empowers AI agents to complete transactions autonomously like humans, and allows developers to focus on creating value rather than processing payment logic. This isn't another declaration of "disruptive technology," but a pragmatic solution: solving practical problems with the simplest means. If successful, x402 could become the HTTP of the internet of value. If unsuccessful, at least it proves that a forgotten status code can also make a big splash. In any case, this story deserves our continued attention.