Like the legendary 30x El Dorado Mastiff, what is the x402 Protocol?

By: blockbeats|2025/10/23 10:00:00

Yesterday, a special Gold Dog was born on Base, and it's called $PING. Based on the cost of initial minting and the current coin price, a successful Mint results in approximately an 18x return.

Like the legendary 30x El Dorado Mastiff, what is the x402 Protocol?

The uniqueness of $PING lies in the fact that its minting process is reminiscent of the inscription from 2 years ago. The cost of minting $PING once is around $1, and if successful, you can receive 5000 $PING. The minting page for $PING is also similar to the inscription from that year, lacking an exquisite front-end interface, and appearing more hard-core.

This is the first token issued through the x402 protocol. So, what is the x402 protocol? Why is the minting process of $PING so special? And what is the current ecosystem of this protocol like?

What is the x402 Protocol?

x402 is an open payment protocol developed by Coinbase that allows AI agents to autonomously complete transactions.

The x402 protocol leverages the long-standing "HTTP 402 "Payment Required" status code to request payment to fulfill an API request or load a webpage. If an API request lacks payment information, x402 returns an HTTP 402 status code, prompting the client to pay and retry the request.

The workflow diagram below intuitively explains how the x402 protocol operates:

(Image Source: Jay Yu - Pantera Capital)

A user makes a request to Claude, "Use my Coinbase wallet to help me buy a pair of jeans on Amazon." Upon receiving the request, the AI initiates a purchase request to Amazon. Amazon then constructs an initial transaction, including the wallet address to be used, the chain to be used, the cryptocurrency, and the specific amount. Once the AI receives this, it sends the transaction to the x402 protocol validator to check if the wallet on the corresponding chain has sufficient assets, if the product is tradable, and if the user has confirmed authorization. Once everything is confirmed, the amount and payment proof are sent to the merchant's address. With that, the transaction is completed.

Overall, the HTTP 402 status code in the protocol serves as an "informational" role, indicating whether a transaction was successful. Coinbase, based on this status code, has added a feature to use blockchain for payments, creating the x402 protocol.

It may sound simple, but looking at the protocol flow above, there are two anticipated aspects. The first is further simplification of the on-chain asset channel for actual payments, eliminating the need for users to cash out into fiat currency before spending, allowing direct spending of assets like USDT, USDC, or other on-chain assets. However, the key to this is widespread adoption, with enough merchants supporting it.

Any Web API or content provider (crypto or Web2) looking to offer a low-cost, frictionless payment path for small or usage-based transactions can integrate x402.

The second aspect is the AI Agent. The AI Agent, acting as the payer/receiver, is well-suited for blockchain payments because unlike humans, AI Agents do not naturally have bank or payment app accounts through KYC. As the intelligence of AI Agents continues to grow, some novel consumption experiences or on-chain experiences are also worth looking forward to.

The workflow also explains why the minting process of $PING is likened to an inscription, as it needs confirmation from the x402 validator. During the minting process, a large number of minting requests not only bombarded the minting interface repeatedly but also provided the first real stress test for the x402 protocol.

Data from the past 30 days shows that the $PING interface has received over 150,000 x402 transactions, totaling approximately $140,000, leading by a landslide over the second-ranked Questflow

This is the first time the x402 protocol has been so lively and well-known in nearly half a year since its launch. Regardless of the chain or protocol, new asset issuance is always a hot topic in the crypto world.

x402 Ecosystem Overview

So, besides $PING, what other projects related to the x402 protocol are worth paying attention to?

The Ecosystem page on the x402 protocol's official website provides a summary of current projects. By checking out each project individually, it feels like this protocol is still in a fairly early stage of development. Many projects either directly lead to technical documentation or jump to the projects' GitHub repositories.

Here we summarize some existing token projects and upcoming launches.

Questflow

A multi-AI Agent work-ordering layer that enables multiple AI Agents to autonomously coordinate task execution. In July of this year, it was announced that they successfully raised a $6.5 million seed round led by cyber•Fund, with participation from Delphi Labs, Systemic Ventures, Eden Block, HashKey Capital, Animoca Brands, Tezos, among others. Additionally, they received grants from the Coinbase Developer Platform, Aptos, and Virtuals.

There is currently no official token, but in December of last year, they collaborated with Virtuals to launch $SANTA, an autonomous Agent cluster utilizing Questflow's QDP (Questflow Developer Platform) and MAOP (Multi-Agent Orchestration Protocol).

The current market value of $SANTA is approximately $4.5 million.

AurraCloud

An AI Agent infrastructure for crypto-native applications. It can immediately host AI Agents using an OpenAI-compatible API or an MCP server and achieve AI monetization through the on-chain x402 protocol on Base.

Additionally, earlier this month, the project also offered x402 validation services.

The $AURA token was launched through Virtuals and currently has a market value of approximately $1.6 million.

Meridian

Incubated by uOS, they provide cross-chain settlement and custody services based on the x402 protocol.

The $MRDN token currently has a market capitalization of approximately $1.5 million.

PayAI

Provides multi-chain x402 payment service support, including Solana, and also offers x402 verification services.

The $PAYAI token currently has a market capitalization of approximately $5 million.

Daydreams

Supports the LLM inference process for apps and AI Agents using x402. Additionally, it is building Lucid—an accessible platform for anyone to deploy Daydreams Agents to solve problems. Users can sign transactions with x402 to pay in USDC, and Agents can mutually pay for access.

The $dreams token currently has a market capitalization of approximately $6.7 million.

Gloria AI

A real-time news platform built for traders, creators, AI Agents, and automated systems, which can be accessed with $GLORIA via x402 payments.

The $GLORIA token currently has a market capitalization of approximately $1.65 million.

Kite AI

Kite AI is creating the foundation transaction layer for the "Agentic Internet," providing a unified identity, payment, and governance infrastructure for autonomous intelligent agents. Kite AI's work is closely related to x402, having referenced support for x402 as early as July and being arguably the only project within the x402 ecosystem that can be classified as part of the "chain."

On September 2nd, according to Fortune, Kite AI announced a total of $33 million in funding, with the latest Series A round amounting to $18 million. The round was led by PayPal Ventures and General Catalyst, with participation from 8VC, Samsung Next, SBI US Gateway Fund, Vertex Ventures, Hashed, HashKey Capital, Dispersion Capital, Alumni Ventures, Avalanche Foundation, GSR Markets, LayerZero, Animoca Brands, Essence VC, and Alchemy.

Kite AI has not yet launched its coin, but recently introduced the Kite Foundation X account, which clearly indicates that a coin launch is imminent. The only tradable asset currently available is the official FLY THE KITE NFT, with a floor price of 0.375 ETH.

Conclusion

In September of this year, Coinbase and Cloudflare announced the formation of the x402 Foundation to drive protocol development. While there are some similar competitors, such as h402 from bitGPT and EVMAuth from Radius, there is no doubt that x402 has the strongest background and highest level of attention.

If the market cap of $PING experiences a significant increase in the near future, x402 will attract more market attention. This is not only beneficial for meme coins but also for infrastructure projects.

Over the past 24 hours, the crypto market has shown strong momentum across multiple dimensions. The mainstream discussion has focused on Coinbase's official entry into the prediction market through the acquisition of The Clearing Company, as well as the intense controversy within the AAVE community regarding token incentives and governance rights.

In terms of ecosystem development, Solana has introduced the innovative Kora fee layer aimed at reducing user transaction costs; meanwhile, the Perp DEX competition has intensified, with the showdown between Hyperliquid and Lighter sparking widespread community discussion on the future of decentralized derivatives.

I. Mainstream Topics

1. Coinbase Acquires The Clearing Company, Officially Entering Prediction Market

This week, Coinbase announced the acquisition of The Clearing Company, marking another significant move to deepen its presence in this field after last week's announcement of launching a prediction market on its platform.

The Clearing Company's founder, Toni Gemayel, and the team will join Coinbase to jointly drive the development of the prediction market business.

Coinbase's Product Lead, Shan Aggarwal, stated that the growth of the prediction market is still in its early stages and predicts that 2026 will be the breakout year for this field.

The community has reacted positively to this, generally believing that Coinbase's entry will bring significant traffic and compliance advantages to the prediction market. However, this has also sparked discussions about the industry's competitive landscape.

Jai Bhavnani, Founder of Rivalry, commented that for startups, if their product model proves to be successful, industry giants like Coinbase have ample reason to replicate it.

This serves as a reminder to all entrepreneurs in the crypto space that they must build significant moats to withstand competition pressure from these giants.

2. Kalshi Launches Kalshi Research and Integrates BSC Network

Regulated prediction market platform Kalshi launched its research arm, Kalshi Research, this week, aimed at opening its internal data to the academic community and researchers to facilitate exploration of prediction market-related topics.

Its inaugural research report highlights Kalshi's outperformance in predicting inflation compared to Wall Street's traditional models. Kalshi co-founder Luana Lopes Lara commented that the power of prediction markets lies in the valuable data they generate, and it is now time to better utilize this data.

Meanwhile, Kalshi announced its support for the BNB Chain (BSC), allowing users to deposit and withdraw BNB and USDT via the BSC network.

This move is seen as a significant step for Kalshi to open its platform to a broader crypto user base, aiming to unlock access to the world's largest prediction market. Furthermore, Kalshi also revealed plans to host the first Prediction Market Summit in 2026 to further drive industry engagement and development.

3. AAVE Token Incentive Controversy Persists as Founders and Whales Increase Holdings Against the Market Trend

The AAVE community recently engaged in heated debates around an Aave Improvement Proposal (AIP) titled "AAVE Tokenomics Alignment Phase One - Ownership Governance," aiming to transfer ownership and control of the Aave brand from Aave Labs to Aave DAO.

Aave founder Stani Kulechov publicly stated his intention to vote against the proposal, believing it oversimplifies the complex legal and operational structure, potentially slowing down the development process of core products like Aave V4.

The community's reaction was polarized. Some criticized Stani for adopting a "double standard" in governance and questioned whether his team had siphoned off protocol revenue, while others supported his cautious stance, arguing that significant governance changes require more thorough discussion.

This controversy highlights the tension between the ideal of DAO governance in DeFi projects and the actual power held by core development teams.

Despite governance disputes putting pressure on the AAVE token price, on-chain data shows that Stani Kulechov himself has purchased millions of dollars' worth of AAVE in the past few hours.

Simultaneously, a whale address, 0xDDC4, which had been quiet for 6 months, once again spent 500 ETH (approximately $1.53 million) to purchase 9,629 AAVE tokens. Data indicates that this whale has accumulated nearly 40,000 AAVE over the past year but is currently in an unrealized loss position.

The founder and whale's increased holdings during market volatility were interpreted by some investors as a confidence signal in AAVE's long-term value.

4. Top Articles: DeFi Curators and Ethereum Annual Summary

In this week's top article, Morpho Labs' "Curator Explained" detailed the role of "curators" in DeFi.

The article likened curators to asset managers in traditional finance, who design, deploy, and manage on-chain vaults, providing users with a one-click diversified investment portfolio.

Unlike traditional fund managers, DeFi curators execute strategies automatically through non-custodial smart contracts, allowing users to maintain full control of their assets. The article offered a new perspective on the specialization and risk management in the DeFi space.

Another widely circulated article, "Ethereum 2025: From Experiment to Global Infrastructure," provided a comprehensive summary of Ethereum's development over the past year. The article noted that 2025 is a crucial year for Ethereum's transition from an experimental project to global financial infrastructure. Through the Pectra and Fusaka hard forks, Ethereum achieved significant reductions in account abstraction and transaction costs.

Furthermore, the SEC's clarification of Ethereum's "non-securities" nature and the launch of tokenized funds on the Ethereum mainnet by traditional financial giants like JPMorgan marked Ethereum's gaining recognition from mainstream institutions. The article suggested that whether it is the continued growth of DeFi, the thriving L2 ecosystem, or the integration with the AI field, Ethereum's vision as the "world computer" is gradually becoming a reality.

II. Mainstream Ecosystem Updates

1. Solana: Launches Kora Fee Layer and propAMM Data Research

The Solana Foundation engineering team released a fee layer solution called Kora this week.

Kora is a fee relayer and signatory node designed to provide the Solana ecosystem with a more flexible transaction fee payment method. Through Kora, users will be able to achieve gas-free transactions or choose to pay network fees using any stablecoin or SPL token. This innovation is seen as an important step in lowering the barrier of entry for new users and improving Solana network's availability.

Additionally, a deep research report on propAMM (proactive market maker) sparked community interest. The report's data analysis of propAMMs on Solana like HumidiFi indicated that Solana has achieved, or even surpassed, the level of transaction execution quality in traditional finance (TradFi) markets.

For example, on the SOL-USDC trading pair, HumidiFi is able to provide a highly competitive spread for large trades (0.4-1.6 bps), which is already better than the trading slippage of some mid-cap stocks in traditional markets.

Research suggests that propAMM is making the vision of the "Internet Capital Market" a reality, with Solana emerging as the prime venue for all of this to happen.

2. Perp DEX: Hyperliquid vs. Lighter Competition Intensifies

The competition in the perpetual contract DEX (Perp DEX) space is becoming increasingly heated.

In its latest official article, Hyperliquid has positioned its emerging competitor, Lighter, alongside centralized exchanges like Binance, referring to it as a platform utilizing a centralized sequencer. Hyperliquid emphasizes its transparency advantage of being "fully on-chain, operated by a validator network, and with no hidden state."

The community widely interprets this as Hyperliquid declaring "war" on Lighter. The technical differences between the two platforms have also become a focal point of discussion: Hyperliquid focuses on ultimate on-chain transparency, while Lighter emphasizes achieving "verifiable execution" through zero-knowledge proofs to provide users with a Central Limit Order Book (CLOB)-like trading experience.

This battle over the future direction of decentralized derivatives exchanges is expected to peak in 2026.

Meanwhile, discussions about Lighter's trading fees have surfaced. Some users have pointed out that Lighter charged as much as 81 basis points (0.81%) for a $2 million USD/JPY forex trade, far exceeding the near-zero spreads of traditional forex brokers.

Some argue that Lighter does not follow a B-book model that bets against market makers, instead anchoring its prices to the TradFi market, and the high fees may be related to the current liquidity or market maker balance incentives. Providing a more competitive spread for real-world assets (RWA) in the highly volatile crypto market is a key issue Lighter will need to address in the future.

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