Coinbase Unveils x402 Protocol for Facilitating On-Chain Payments through HTTP

Coinbase has introduced a new open-source protocol for on-chain payments utilizing HTTP, referred to as x402.

Launched on May 6, this protocol reimagines the seldom-used HTTP 402 “Payment Required” status code, allowing for direct payments using stablecoins in a manner suitable for machine interactions.

The x402 protocol is designed to empower autonomous agents and applications to make payments for access to APIs, data, and services without the need for human oversight, subscriptions, or traditional payment systems.

### Business Models and Use Cases

This innovative design allows a server to respond with an HTTP 402 status and payment instructions when a client requests a resource that requires payment. In this scenario, whether the requester is a human user or an autonomous agent, they can initiate a transaction on the blockchain and resubmit their request with a signed payment.

This architecture paves the way for microtransactions in areas such as content access, contextual data retrieval, and AI processing, thereby making pay-per-use pricing not only technically viable but also economically sensible. Currently, x402 functions as an open standard with an example implementation available on Coinbase’s GitHub and development platform.

The exchange has stated that future versions will be open to community contributions and decentralized governance.

The design of x402 seamlessly supports micropayments across various industries. For instance, AI agents can pay per API call, content can be monetized based on individual articles or streams, and cloud computing resources can be sold by the second or per gigabyte.

The project’s documentation outlines practical applications like gaming models where users pay per game session, AI models where payment is made per inference, and publisher paywalls where access is granted per article.

Moreover, the protocol aims to ease compliance and operational challenges by removing the need for PCI certification and reducing the risk of chargebacks. Once a transaction is confirmed on-chain, it becomes irreversible, with payment processing conducted entirely in a decentralized manner.

### Autonomous Transactions

The x402 documentation highlights its solution to inefficiencies found in conventional payment systems, which typically depend on account-based structures with delayed settlements and centralized control.

Traditional payment methods such as ACH and credit cards introduce delays, risks of chargebacks, and onboarding processes driven by human involvement, making them unsuitable for machine-to-machine transactions or autonomous AI applications.

In contrast, x402 allows for quick, irreversible payments, achieving settlement times that average around 200 milliseconds when implemented on rollups.

The protocol processes payments using stablecoins and is designed to operate across multiple blockchains and tokens.

Furthermore, x402 simplifies real-time revenue collection by enabling direct integration of signed payments into HTTP requests, negating the need for API keys, pre-registration, or manual invoicing.

### Developer Integration

The x402 protocol supports a JSON format for payment requests embedded within HTTP 402 responses. To avoid replay attacks, the server details the payment information, which includes the recipient wallet address, network identifier, asset contract address, payment expiration date, and a nonce.

Clients then respond by signing a payment authorization according to the EIP-712 standard, which is subsequently broadcast to the blockchain to finalize the transaction.

EIP-712 provides a standardized approach for structuring, hashing, and signing typed data, ensuring that data signing on Ethereum remains user-friendly and verifiable.

Coinbase also offers middleware libraries for both Node.js and browser environments, allowing developers to integrate the protocol using a single line of code. The x402 framework employs wallet interfaces to confirm payments, giving total transparency regarding the transaction costs, assets, and destinations.

Developers can utilize testing environments that include mock APIs and wallets alongside support for batched settlements, layer-2 blockchains, and payment channels.

This innovation suggests a fundamental shift in the interaction between internet services and financial transactions by facilitating on-chain payments via HTTP.