Galaxy Research Long Report: x402 and the "Leviathan Moment" of the AI Economy

Source: Galaxy Research

Author: Lucas Tcheyan, Vikram Singh

Original Title: Agentic Payments and Crypto’s Emerging Role in the AI Economy

Translation and Editing: BitpushNews

Introduction

AI Agents are poised to fundamentally change the landscape of the internet. Continuous advancements in artificial intelligence have enabled intelligent agents to serve as programming assistants, shopping advisors, planning tools, and experts across various fields. They represent a powerful new paradigm of human-machine interaction, centered on significantly reducing the need for humans to directly operate browsers and search engines.

In Galaxy Research’s 2024 report “Understanding the Convergence of Cryptocurrency and Artificial Intelligence,” we view AI agents as one of the most promising growth directions, noting that they are “very suitable for crypto scenarios—users (or the agents themselves) can create wallets to transact with other services, agents, or people.” At that time, the agent space was still in its infancy, mainly limited by three factors: the intelligence level of underlying AI models, infrastructure supporting complex task execution, and regulatory clarity beyond native Web3 use cases.

Just over a year later, progress in these three areas has been astonishing:

• Rapid improvement in AI intelligence enables agents to perform “long-term reasoning” and autonomously execute complex tasks with unprecedented reliability.
• Breakthroughs in agent toolchains, including the release of foundational protocols such as Model Context Protocol (MCP), Agent-to-Agent (A2A) Protocol, Agent Payments Protocol (AP2), and the x402 standard.
• Regulatory environment becoming clearer, especially regarding stablecoins, accelerating the integration of crypto payment channels with traditional systems.

These developments collectively open the door for large-scale adoption of AI agents utilizing blockchain for payments. One of the most promising advances driving this trend is the emergence of x402 and related payment standards. These standards enable agents to pay directly with stablecoins or other crypto assets for services and data fees. For simplicity, we refer to such protocols collectively as Agentic Payment Standards (APS).

In short, APS unlocks the full economic potential of agents on the internet. Through APS, agents can:

• Become smarter (by accessing external data)
• Become more powerful (by paying for resources)
• Be more collaborative (by transacting with other agents)

Beyond functional expansion, APS also acts as a bridge between on-chain and off-chain economies, allowing any enterprise to sell to the fastest-growing user category on the internet—AI agents—and accelerating the adoption of stablecoins in payments.

By restructuring the business model of APIs (Application Programming Interfaces, the standard way for software to request data or services), APS has the potential to enhance the capital efficiency of a long-neglected economic engine. Economically, it also brings a fundamental change to API key management, creating a transformative experience for developers. These changes make it easier to develop new applications.

This article focuses on x402, one of the leading emerging on-chain agentic payment standards. We will examine x402 within the broader APS landscape, exploring early applications, use cases, and whether blockchain can become the backbone of the emerging agentic economy and finance.

x402 Standard

Background

In May this year, Coinbase introduced the x402 standard, a protocol that uses HTTP (the fundamental language for server-to-server communication) to facilitate encrypted transactions within web interactions. Previously, web transactions relied on traditional payment rails (Visa, Mastercard, etc.), but x402 opens the door to intelligent payments, allowing access to digital services using stablecoins and cryptocurrencies.

x402 refers to the HTTP status code “402 Payment Required,” which is included in the original specifications of the internet web protocol. Although HTTP initially included the 402 status code, it remained largely unused due to a lack of supporting infrastructure. Instead, supplementary payment infrastructures built by companies like PayPal and Stripe, relying on traditional payment rails, facilitated electronic commerce. While these infrastructures promoted e-commerce growth and reduced payment friction, they diverged from the internet’s inherent network capabilities.

Source: x402 White Paper

The key breakthrough brought by x402 is that now anyone (human or agent) can pay for online services much more easily. According to the development team, the standard aims to “enable value to flow seamlessly across the internet like information—regardless of whether the actor is an individual, application, or agent.” The most common manifestation is simplifying API request flows. As Coinbase’s team succinctly states: “Let’s eliminate API keys.”

Payment Process

The x402 payment process is straightforward, comprising four main components:

1. Client: The agent (or user software) initiating the service request.

2. Server: The service provider that responds with a 402 request and ultimately delivers the paid resource.

3. Coordinator: Executes and/or verifies the payment.

4. Blockchain: The settlement layer where stablecoin/crypto asset transfers actually occur.

Source: x402 White Paper

The agent sends a request to the server to obtain a product or service (e.g., streaming subscription or e-book), and the server responds with a “payment required” request (HTTP 402). This request includes fields such as the required amount, accepted token types, the wallet address to send payment from, and the blockchain where the payment occurs.

The agent then responds to the payment request, providing all necessary information and authorizing the payment with an encrypted signature. Finally, the coordinator handles the actual payment on the blockchain and confirms with the server, which then returns the requested service to the agent.

This is the standard payment flow adopted by x402, but many variations are possible. For example, if the agent controls its own wallet and can transact on the blockchain, it can directly submit payment and verification without relying on a coordinator. However, so far, coordinators have been used because they abstract away the complexity of blockchain interactions such as wallet management, gas payments, and network selection. In this regard, coordinators are similar to traditional payment service providers, but they do not hold funds or control the private keys of involved wallets at any time. Instead, the agent controlling the wallet authorizes specific content (“sending up to X dollars from payer’s wallet to payee’s wallet”), leaving the details (which chain, how much gas, etc.) to the coordinator.

x402 V2

On December 11, Coinbase released x402 V2, a major upgrade based on feedback from the past six months. V2 begins transforming x402 from a relatively simple but effective smart payment protocol into a more modular standard designed to adapt to the evolving blockchain environment and support a broader range of payment use cases.

At a high level, x402 V2 expands the protocol in three key dimensions. First, it introduces a unified payment interface supporting multiple blockchains and assets through a single format, while also enabling integration with legacy payment rails via coordinators. Second, it adds wallet-based identity verification and reusable access sessions, allowing clients to avoid repeated on-chain interactions for subsequent requests—reducing latency and supporting higher-frequency use cases. Third, it implements automatic service discovery, enabling coordinators to index endpoints, pricing, and routing information without manual configuration.

These changes collectively enable x402 to support more complex business models, including subscriptions, pre-paid access, usage-based billing, and multi-step agent workflows.

x402 Smart Payment Tech Stack

The x402 tech stack is gradually taking shape. The pace of project and infrastructure releases is exponential, and below we summarize as many projects as possible (not comprehensive, and this article does not endorse any particular project—just for reference).

The value flow within the x402 payment tech stack begins at the agent layer, flowing downward through the coordination layer, execution layer, and settlement layer, then as fulfilled service access rights upward.

First, the agent or application initiates a task requiring access to a paid service, such as querying an API, retrieving proprietary data, or calling another agent. The agent determines what it needs and under what constraints (including price, latency, preferred chain, or budget).

The coordination layer shapes how the agent broadcasts intent, discovers services, exchanges context (relevant information needed to complete the task), and coordinates workflows before payment occurs. It embeds additional functionalities beyond payment and settlement protocols, including service discovery mechanisms, intent signaling, constraint enforcement (rules or limits like budget, time, or permissions), context management, and multi-step or multi-agent coordination.

Once terms are agreed upon, the agent initiates payment via the coordination layer. The coordinator (operated by a third-party provider) handles routing, verification, and execution of the transaction, abstracting blockchain-specific complexities and interfacing with legacy payment rails when necessary.

The currency layer defines what is transferred—typically stablecoins—enabling predictable pricing and programmable settlement suitable for high-frequency, machine-native transactions. USDC has been the dominant form so far, but in theory, any cryptocurrency can be used.

Finally, the blockchain layer executes and finalizes the transaction, providing encrypted settlement and auditable records. Confirmation information then propagates back up the stack, allowing service providers to deliver the requested resources to the agent.

Emerging Crypto Use Cases

As previously mentioned, x402 activity surged initially in late October and early November, then gradually declined.

Source: Artemis Analytics

As with the introduction of primitives in the crypto space, initial adoption and interest were mainly driven by speculation. The peak in late October was caused by teams minting and purchasing Memecoins using x402. Since then, the volume and number of transactions involving agent-to-agent services, data-as-a-service, infrastructure, and utility transactions have increasingly captured market share.

This is the essence of permissionless crypto products. Initial speculative use cases attract users, then developers begin experimenting and building applications beyond speculation. In fact, after filtering out all gamified transactions (defined by Artemis Analytics as obvious self-trading or wash trading), the proportion of such transactions has fallen below 50% since early December.

The most attractive and potentially sustainable use cases are those that leverage x402 to offer differentiated products compared to legacy payment rails. This mainly includes services that are costly on traditional rails due to transaction fees, and use cases requiring internet-native currencies, as legacy systems are limited by restricted programmability, slow settlement times, and reliance on non-native intermediaries.

Currently, these services are primarily dominated by providers supporting one-off API calls, which traditionally required subscriptions. For example, trading agents can pay on-demand to access blockchain data providers like Nansen or AI analysts’ APIs to supplement their crypto analysis. Beyond data access, x402 also enables agents to pay programmatically for infrastructure services (e.g., computing resources), which are difficult to price or automate via subscription or manual intermediaries. Leading decentralized AI lab Nous Research has enabled x402 payments to access its Hermes 4 model.

Despite promising prospects, these examples are largely still at the proof-of-concept stage, demonstrating infrastructure capabilities rather than the growth drivers needed for large-scale adoption of x402. This is not to diminish any individual project or its potential but to acknowledge that most on-chain products still primarily target crypto-native audiences and only represent a subset of potential applications. The next section will explore more use cases and the broader conditions needed for scaling intelligent payment standards.

Context and Data Access

One of the most notable non-crypto-native use cases for intelligent payment standards is paid access to online context and data. As AI agents increasingly rely on external information to perform tasks, programmable, per-request content access becomes essential.

Cloudflare provides an early example of how this pattern might emerge. As a major infrastructure provider that hosts and protects much of the internet’s content, Cloudflare has been mediating interactions between websites and automated traffic. In 2024, it launched a “pay-per-crawl” mechanism allowing bots and crawlers to pay for access instead of being outright blocked.

Subsequently, Cloudflare announced plans to integrate this infrastructure with x402 (the company has partnered with Coinbase to establish the x402 Foundation), enabling agents to pay directly via internet-native payment rails. If standardized, this approach could turn bot mitigation from an access control problem into a market-based mechanism driven by pricing. In short, an old problem becomes a potential revenue opportunity.

This pattern naturally extends to paid content and proprietary data. Today, large language models mainly rely on internal training data and freely available sources (like Wikipedia).

However, high-quality information is often locked behind subscriptions or paywalls—for example, news media, research databases, and analytics platforms. Under current paradigms, accessing this data requires users to leave the agent interface, purchase a subscription (even if only for one-time use), and manually transfer information, resulting in poor user experience and inefficient capital allocation.

Intelligent payment standards offer an alternative. Users can allocate explicit budgets to agents, allowing them to pay per request or per token to access content behind paywalls. For example, an agent needing to access a single article can submit an x402 request with a small payment, retrieve the content, and complete the task without the user having to buy a full subscription. While this may compress content providers’ per-user profit margins, increased query volume and more granular pricing could offset these effects over time.

In summary, context and data access exemplify a category where intelligent payments offer clear improvements over legacy payment systems. They also suggest that adoption of standards like x402 may originate outside crypto-native environments, embedded within existing infrastructure that already coordinates interactions among agents, content, and networks.

E-commerce

One of the most discussed areas for adopting intelligent payments is e-commerce. It is expected that intelligent commerce will grow rapidly over the next decade, with B2C revenues estimated to reach $3 trillion to $5 trillion by 2030. As a result, this sector has attracted significant attention from existing payment networks and processing institutions, many of which are actively developing crypto-native payment infrastructure.

However, in e-commerce, x402 faces a more competitive environment than API-native or micro-payment use cases. Retail transactions are typically higher value and less sensitive to per-transaction fees, reducing the relative advantage of ultra-low-cost blockchain settlement. More importantly, existing payment providers have already established the core business and regulatory infrastructure that sustains merchants, and they are rapidly expanding these capabilities to support autonomous agents without relying on on-chain primitives.

• Visa’s Intelligent Commerce Suite (launching early 2025) will enable consumers to configure Visa card credentials into AI agents for end-to-end shopping, integrated with platforms like OpenAI and Anthropic.
• PayPal’s Agentic Commerce Services (October 2025) will allow PayPal merchants to sell products via agent interfaces like ChatGPT, while maintaining fraud detection, buyer protection, and merchant workflows.
• Stripe’s Agentic Commerce Protocol (ACP), developed jointly with OpenAI and announced mid-2025, defines a standardized way for AI agents to initiate and complete purchases with merchants, with minimal changes to Stripe integration.
• Mastercard’s Agent Pay (April 2025) tokenizes consumer credentials, enabling AI systems like Microsoft Copilot to autonomously execute purchases, initially focusing on subscriptions, loyalty redemptions, and programmable payments.

In some cases, these initiatives can reduce reliance on blockchain-based payment protocols by extending traditional rails to support agent-native workflows; in others, they may be complementary. For example, the two most prominent adopted standards today are Google’s AP2 and Stripe’s ACP. While not yet the primary implementations of either, x402 can be integrated to facilitate stablecoin payments via either (e.g., via A2A for agent-to-agent, or via ACP for merchant-initiated transactions).

Below, we outline Stripe’s efforts in advancing intelligent payments to better illustrate this pattern.

Stripe’s Push for Intelligent Commerce

Stripe’s ACP is an open standard defining how AI agents, merchants, and payment systems communicate during checkout. It standardizes the checkout dialogue—such as product selection, pricing, confirmation, and completion—without prescribing how funds are ultimately settled. It acts as a coordination layer for checkout, independent of the payment rail itself, and is agnostic to payment processors, meaning merchants can adopt the protocol without changing their existing payment providers.

To support secure payment authorization within this framework, Stripe introduced shared payment tokens. Although called “tokens,” SPTs are not crypto assets nor do they represent independent payment rails. Instead, they serve as limited scope payment authorizations, allowing agents to authorize merchants to deduct up to a specified amount from their preferred infrastructure. This means the underlying settlement can be any form—card, bank transfer, or stablecoin.

Shared Payment Token Payment Flow

Together, ACP and SPT enable agents to participate in e-commerce while maintaining protections relied upon by merchants, including fraud detection, dispute resolution, refunds, regulatory compliance, and customer support. Stripe further packages these components into its Agentic Commerce Suite, providing a one-stop solution for merchants wishing to support agent-driven purchases without redesigning their payment tech stack.

How x402 and ACP Work Together

Stripe’s intelligent commerce stack differs from x402 mainly in scope and transaction context.

• x402 is built for software-to-software payments. Agents see a price, pay automatically, and immediately gain access to the service. This applies to APIs, data, and digital tools used within agent workflows.
• ACP and SPT are designed for purchasing physical goods or services. These transactions are longer, with merchants responsible for fraud, refunds, and often requiring user approval before payment.

To illustrate how these systems coexist in practice, imagine an AI agent entrusted by a user to plan and book a vacation. First, the agent assesses potential travel dates and destinations. It queries several specialized data providers, such as a premium weather forecast service and a demand prediction API for flight prices, which are integrated with x402. The agent can programmatically discover pricing, pay for access, and retrieve data per request.

These calls are irreversible and require no manual intervention. After obtaining the data, the agent determines the best travel dates and begins selecting flights and hotels. At this point, the transaction shifts to an e-commerce process. The agent uses ACP to initiate checkout with airlines or travel platforms. Payment is authorized via SPT, allowing merchants to process the transaction while ensuring fraud protection, refunds, chargebacks, and compliance. The user reviews and approves the purchase, completing the booking, which is then fulfilled.

In this workflow, x402 and ACP serve different but complementary roles. x402 operates upstream in the checkout process, enabling autonomous payments for resources outside traditional commercial flows.

Meanwhile, ACP handles regulated transactions where merchants require protections from existing payment systems, and the user must sign off before payment occurs. A significant breakthrough here is that agents can seamlessly switch between different payment models based on context, choosing the most appropriate mechanism for each step.

Beyond functional differences, there is an important structural distinction. x402 is designed as an open standard for settlement on public, permissionless blockchains, enabling agents to transact without relying on centralized intermediaries. In contrast, many existing agentic payment standards, while protocol-open, operate primarily on permissioned platforms, with execution, compliance, and settlement still tightly coupled to centralized payment providers. These approaches support different use cases and trust models and are not mutually exclusive. In practice, hybrid architectures may emerge, where agents use permissionless rails for machine-native transactions and rely on permissioned systems for regulated commercial and consumer payments.

Conclusion

Rather than immediate mass adoption of on-chain payments, intelligent payments are more likely to gradually and quietly promote blockchain adoption in the future. Stablecoins accelerate this shift by reducing friction with traditional systems, and infrastructure like x402 makes new forms of experimentation—difficult to support with legacy payment channels—possible.

In the short term, adoption may be uneven. Certain use cases, especially payments between agents and digital services, could develop rapidly, while consumer-facing e-commerce remains relatively stable. In many cases, blockchain will operate behind the scenes, embedded within agent workflows rather than directly exposed to end users.

The most immediate and underappreciated impact of intelligent payment standards is not in commercial transactions, but in software production. For many non-production tasks, modern language models have reached a level where human involvement is largely redundant. Today, the main bottleneck is no longer intelligence or execution but access: purchasing API subscriptions, managing accounts, handling API keys, and paying for bundled services that are rarely fully utilized. If intelligent payment standards can eliminate these frictions—replacing subscription-based access and manual key management with “pay-per-use” machine-native payments—they can substantially lower experimentation costs and compress the value of entry-level software engineering work.

From this perspective, the most notable recent application of x402 is not abstract commercial interactions between agents, but micro-payments for API and data access. Allowing agents to pay per API call or discrete context unit unlocks a more capital-efficient model for users and providers. Users no longer need to overpay for subscriptions but can allocate a clear budget (e.g., a fixed monthly quota), enabling their agents to autonomously purchase data, analysis services, or contextual information as needed. This pattern better aligns incentives, improves user experience, and expands the economic “surface area” accessible to AI systems.

Over time, the question will shift from “whether blockchain is used” to “where and how it is used.” Industry giants are already integrating intelligent payment capabilities, experimenting with stablecoins and blockchain rails, indicating that on-chain settlement will increasingly coexist with traditional payment infrastructure. The unresolved question is whether these activities will concentrate on permissioned chains or consortiums controlled by centralized entities, or on open, permissionless networks like Ethereum or Solana. Likely, both will coexist.

More broadly, the emergence of intelligent payment standards reflects a shift in how cryptocurrencies are adopted in the future. Blockchain infrastructure is increasingly integrated into existing financial and software systems rather than forming an independent industry. In this model, success is not defined by the growth of an isolated “crypto economy,” but by how much crypto-native “rails” silently support applications that do not self-identify as “crypto.” x402 exemplifies this dynamic—by embedding payments directly into standard network interactions, it positions blockchain as a backend infrastructure—offering programmability and global settlement without requiring users or developers to explicitly deal with crypto.

On-chain intelligent payments are unlikely to fully replace the existing payment ecosystem. Instead, they will first complement areas where machine-native currencies have a clear advantage—such as automating access to APIs, data, and digital services—and gradually expand into higher-value business processes. Along the way, they may subtly reshape how software is built, priced, and consumed, positioning blockchain as a foundational layer for the emerging agent-driven internet rather than a visible endpoint.