x402 protocol adds usage-based pricing for AI compute requests

Q: What is the x402 protocol upgrade by Coinbase?

The x402 protocol upgrade introduces usage-based pricing for AI compute requests, allowing costs to vary based on factors like token count and compute time.

Q: How does the 'Upto' scheme benefit agentic AI services?

'Upto' enables variable-cost services for agentic AI, facilitating payments based on actual usage rather than fixed fees, which is essential for complex queries and computations.

Q: What implications does the x402 protocol have for future AI commerce?

The x402 protocol is expected to support increased network demand and frictionless payments for agentic AI, which could lead to significant advancements in autonomous agent transactions.

Coinbase has announced an upgrade for the x402 protocol, enabling usage-based pricing for agentic AI compute requests, which replaces the former flat fee model.

In a post on X on Thursday, Coinbase Developer Platform announced the "Upto" scheme has gone live, adding it will help open up "variable-cost services" for agentic AI such as large language model inference, compute and data queries.

"Until now, x402 only supported exact, fixed-price payments. That works great for deterministic APIs. But it blocked an entire category of services where the cost depends on usage, such as token count, compute time, or query complexity," Coinbase Developer Platform said.

"Upto is an EVM implementation, supporting all ERC20s, and CDP Facilitator supports fully gasless payments," it added.

The move comes amid growing support for the x402 protocol as a wide range of firms prepare for future agentic commerce adoption, which is expected to bring extreme levels of network demand and require frictionless payments and near-instant transactions to support agentic AI.

Source: Coinbase Developer Platform

Flat-fee problem gets a fix

The Upto scheme allows sellers to configure maximum prices, while buyers will be able to authorize prices up to a specific amount.

On the server end, where costs fluctuate, the server will charge only for how much it actually takes to complete the task, meaning users won't be overcharged and may even pay less than the specified maximum price.

Previously, simple and complex requests cost the same amount, resulting in some users either overpaying or underpaying for tasks done by AI agents. This upgrade will help users set prices they are willing to pay before a task instead of guessing how much they think the task will cost for an agent to complete.

Developed by Coinbase, the protocol's ownership was handed over to the nonprofit Linux Foundation earlier this month, with big tech firms such as Google, Microsoft and Amazon Web Services having a stake in the protocol via the x402 Foundation.

Despite the hype surrounding x402, the network has seen declining adoption rates in 2026 after hitting peak levels in November, according to Dune Analytics data. Between Nov. 4 and Nov. 10, the protocol saw 13.7 million transactions, its biggest week on record.

However, it has been on a steep decline since then, with weekly transaction volume dropping below 1 million in early January and continuing to plunge further over the first quarter. As of the last week in March, x402 saw just 112,708 transactions.

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