The Rise of AI Agent Payments: How x402, AP2, and ERC-8004 Are Powering the Machine Economy

The Evolution of AI Agents

The boundaries of AI technology are rapidly expanding, shifting from simple tool assistance to AI Agents capable of autonomous decision-making, action, and economic transactions. These Agents are shaping a new era of machine economy, where, with user authorization, they can independently complete tasks, conduct transactions, and make payments. Traditional payment systems, reliant on manual verification and closed networks, are clearly inadequate for the real-time and autonomous needs of these intelligent entities.

To address these demands, three foundational protocols have emerged: x402, Agent Payments Protocol (AP2), and ERC-8004. Each protocol builds a new generation of AI Agent payment infrastructure by addressing payments, authorization, and identity respectively.

x402: Embedding Payments into Internet Protocols

Developed by Coinbase, the x402 protocol revives the long-overlooked HTTP 402 status code (Payment Required), embedding payment functionality directly into the HTTP communication process. This means that, in future Web environments, every API request could simultaneously enable both information access and payment settlement.

Within the x402 model, the buyer (client) sends a request, and the seller (server) replies with a 402 payment required response. The buyer’s wallet generates an authorization message based on this response (for example, using ERC-3009’s TransferWithAuthorization), and settles with a stablecoin like USDC. Once the transaction is confirmed, the seller delivers the service. This entire workflow eliminates third-party involvement and manual intervention.

This mechanism dramatically reduces payment friction, allowing AI Agents to autonomously initiate transactions and instantly access services or data. x402 currently supports multi-chain operations—including major blockchains like Base, Avalanche, and Solana—and allows for payment with various assets according to server configuration.

AP2: Defining Compliance and Accountability for AI Agents

If x402 is the execution layer for payments, then the Agent Payments Protocol (AP2) is the rules layer for the entire system. AP2 is designed to give AI Agent transactions three core capabilities: verifiable authorization, traceable actions, and clearly defined accountability.

At the core of AP2 is the digital mandate—a cryptographically signed, tamper-resistant digital contract. Depending on the use case, AP2 defines three types of mandates:

• Intent Mandate: Used for scenarios in which the AI makes autonomous decisions, such as “automatically purchase concert tickets with a budget cap of 500 units.”
• Cart Mandate: Used in user-initiated transactions, where the user signs off on goods and prices.
• Payment Mandate: Shared with banks and payment networks at the payment stage to identify Agent participation and assist with dispute resolution or risk management.

With AP2, AI Agents can complete autonomous transactions legally and transparently, while providing financial institutions, regulators, and merchants with clear, actionable records.

ERC-8004: Establishing On-Chain Identity for AI Agents

Identity and trust are fundamental to the AI Agent economy. ERC-8004, an identity protocol on Ethereum, provides intelligent agents with a verifiable, traceable identity system. The protocol is built on three core registries:

1. Identity Registry

Based on the ERC-721 NFT standard, each Agent is assigned a unique tokenId and profile, defining its name, functions, and API endpoints.

2. Reputation Registry

Manages each Agent’s credit score and service feedback, utilizing a hybrid approach of on-chain composability and off-chain aggregation to maximize efficiency and authenticity.

3. Validation Registry

Supports external validation methods such as economic staking, TEE attestations, and ZKML verification, ensuring the authenticity of Agent behavior and outcomes.

ERC-8004 transforms AI Agents from black boxes into autonomous entities that can be identified, tracked, and trusted.

Convergence of the Three Protocols

x402, AP2, and ERC-8004 do not operate independently—they come together to form a complete AI Agent payment infrastructure:

• x402 handles transactions and settlement
• AP2 oversees authorization and accountability
• ERC-8004 establishes identity and trust

Through this integration, AI Agents can not only execute tasks but also autonomously manage assets, initiate payments, and engage in market interactions, making machine-to-machine payments a reality and powering a new economy driven by algorithms and intelligent agents.

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Conclusion

As AI Agents become more autonomous, payment systems are being fundamentally redefined—from the native on-chain payments of x402, to the authorization standards of AP2, and the decentralized identity framework of ERC-8004. These three protocols are establishing the trust layer for the AI Agent economy. Looking ahead, AI Agents will not only operate intelligent applications but also emerge as new actors in the financial world—creating, exchanging, and accumulating value—ushering in a true era of AI-owned wallets and assets.