The x402 protocol has launched a major upgrade enabling usage based pricing for AI compute requests, replacing its earlier fixed-fee system. The update was announced by Coinbase via its Developer Platform and introduces a new scheme called “Upto”, designed for variable-cost services such as large language model inference, compute workloads, and data queries.
Previously, x402 only supported exact fixed pricing, which worked for deterministic APIs but failed for services where costs vary based on token usage, compute time, or query complexity. The new model allows sellers to set a maximum price while buyers authorize spending up to that limit, with final costs based on actual resource usage.
EVM-Based System Enables Flexible AI Payments
The system runs on the Ethereum Virtual Machine and supports all ERC-20 tokens, along with gasless payments through Coinbase’s facilitator infrastructure. This structure is designed to improve efficiency in AI-driven transactions and prevent users from overpaying for lighter compute tasks.
Push Toward Agentic AI Economy
The upgrade targets the emerging agentic AI economy, where autonomous systems handle payments and compute tasks at scale. The protocol was developed by Coinbase but has been transferred to the Linux Foundation, with participation from Google, Microsoft, and Amazon Web Services through the x402 Foundation.
Despite early adoption, x402 activity has dropped sharply in 2026. Data shows peak usage reached 13.7 million transactions in November, fell below 1 million weekly in January, and declined further to about 112,708 weekly transactions by March, signaling reduced network activity even as development continues.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.