Why Didn't the x402 Protocol Pull a DeFi Summer?

By: blockbeats|2025/10/28 03:30:01

It has been almost a week since the x402 Protocol ignited the market enthusiasm due to the meme coin $PING. So far, the vast majority of market sentiments have been positive, with optimistic outlooks on the future development of the x402 Protocol and discussions on various projects. However, some voices also suggest that x402's rapid rise may be too fast, potentially unable to sustain the overheated market expectations in the short term, leading to a lack of follow-through.

So, what changes have occurred in the x402 Protocol ecosystem in this nearly one-week period? After reviewing and analyzing the changes in the x402 ecosystem over the past week, we can provide an answer to the content of the article title.

Market Enthusiasm Unabated, Continuously Hot

Regardless of how the market views $PING's rapid surge, $PING has indeed raised awareness of the x402 Protocol among industry players. Before the surge of $PING, the 30-day data of the x402 ecosystem showed that the minting interface of $PING had received over 150,000 x402 transactions, amounting to approximately $140,000, leading by a landslide against the second-ranked Questflow, which had only about 24,800 transactions totaling less than $1,400.

Why Didn't the x402 Protocol Pull a DeFi Summer?

However, in just 24 hours, the data has far exceeded the previous 30-day data. In the past 24 hours, the top 10 most interacted services have received around 280,000 transactions, which is twice the 30-day data. At the same time, the amount totals approximately $246,000, also doubling the 30-day data.

It can be said that to date, the x402 Protocol is by no means a flash in the pan and continues to be well-received by the market.

Hype Shifts from Meme to Application

As the first meme coin born out of the x402 Protocol, $PING was once compared by many players to the first token of the BRC-20 Protocol, $ORDI, during the most FOMO stage. However, after $PING briefly surpassed an $80 million market cap, it was unable to continue its rapid ascent and has now retraced to a market cap of around $29 million.

The driving force behind meme coins relies on market sentiment. However, following the tweet from OKX CEO Star with a screenshot of $PING, which lacked further tweets in the short term that could drive market sentiment, a pullback in $PING was also to be expected.

One major difference from Emblem Assets Protocols like BRC-20 is that the x402 Protocol itself is a protocol that focuses on payment + AI Agent. Therefore, instead of withdrawing their enthusiasm and funds from the x402 Protocol, players shifted them to x402 Protocol ecosystem-related application targets.

$PAYAI took advantage of this opportunity and became the new leader of the x402 Protocol. Yesterday, $PAYAI's market capitalization briefly exceeded $76 million, marking an increase of approximately 12 times since October 24. Currently, the coin has experienced a pullback, with a market cap of around $53 million.

This is mainly due to two factors, with the primary reason being that Payai is currently the second-largest Facilitator in the ecosystem after Coinbase official, providing on-chain validation and settlement services for the x402 Protocol:

Currently, PayAI has processed over 14% of x402 transactions, making it the largest Facilitator after Coinbase in terms of transaction processing volume.

Additionally, Payai's founder Notorious is the 7th ranked contributor on the x402 Protocol's official Github, which players interpret as a "close connection between the project and the x402 Protocol."

Ecosystem-related tokens such as $dreams and $SANTA have also seen significant price surges. If you want to dive deeper into these ecosystem-related projects, you can refer to last week's article on BlockBeats, "Like the 30x Big Golden Dog of Emblem, What Is the x402 Protocol?."

Even some projects that just mentioned plans to work on x402-related projects have seen instant skyrocketing in the past few days, such as Karum, Praxis, and others. Currently, these projects have experienced significant retracements after the short-term emotional hype, highlighting the need to be cautious of the risks brought about by FOMO.

Various Chains' Layout in the x402 Track

The popularity of the x402 protocol has not only attracted players but also drew attention from multiple chains. As an open protocol designed to inherently support multiple chains, Coinbase's in-house Base Chain, as the "home turf," goes without saying, while the development of x402 on Solana and BNB is also worth our attention.

Yesterday, Solana's founder, toly, tweeted, "x402 is cool."

This tweet led to the $x402 meme coin on Trend.fun briefly surpassing a $4 million market cap. Trends.fun founder mable then posted on the X social platform proposing to hold an "x402 Solala Hackathon" event to find excellent AI payment projects. This received support from Solana's Global Developer Ecosystem Lead, Jacob Creech.

Tokens such as $PAYAI and $dreams with outstanding market performance are all on Solana, giving Solana a certain advantage at the moment.

The BNB Chain official tweet also promoted four x402 protocol-related projects on the BNB Chain yesterday, namely Unibase, pieverse, AEON.xyz, and TermiX AI.

OKX Web3 Wallet Mobile Lead Felix Fan tweeted yesterday that he received support from x402 protocol core contributor Bob Xu and they will jointly explore achieving permissionless transactions between AI Agents on the X Layer:

Compared to the early days of Bitcoin's ecosystem when it was ignored, the x402 protocol has received attention from multiple chains this time, and we believe its development will be even faster.

Conclusion

After analyzing the changes in the x402 ecosystem over the past week, we can now answer the question posed in the article's title.

Firstly, the primary reason for x402's continued hype, in the editor's opinion, is Coinbase's backing. The protocol's long-term development initially needs to overcome the major hurdle of merchant "onboarding" before focusing on user "adoption." As this is Coinbase's in-house protocol, coupled with the foundation established in partnership with CloudFare, it theoretically has sufficient resources to drive widespread adoption.

This is also why, despite the existence of similar competitors such as bitGPT's h402 and Radius's EVMAuth, the x402 protocol has not seen a slew of x402-XXX new protocols being minted and new assets being issued, as was the case with BRC-20 protocols during their heyday—Coinbase's brand itself serves as a hype driver for players.

Secondly, compared to the early days of BRC-20 when there was a single narrative of issuing new meme coins with no other narrative to follow, meme coins in x402 are simply the "icing on the cake." Players not only have meme coins to choose from but also several application targets already available, and these targets align with the protocol's narrative. Despite criticisms of the immaturity of these applications, this is not crucial for players. Having space for funds to move within the narrative prevents a sudden influx or rush to withdraw.

It has been quite some time since an ecosystem like x402 has seen such a fresh narrative that evokes high enthusiasm from both the crypto community, project teams, and the ecosystem as a whole. Not only have meme coins been in the limelight, but application coins have also reentered players' attention, marking a positive start.

However optimistic one may be about the future of the x402 ecosystem, everyone should still be mindful of the investment risks during times of overheated emotions.

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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