The x402 protocol’s new pricing mechanism will allow AI agents to pay for computing resources based on actual usage rather than fixed rates.
summary
- Coinbase has introduced an “Upto” mechanism for the x402 protocol to enable usage-based payments for AI computation tasks.
- The update replaces fixed-price models with a system where users only pay for actual resource consumption, such as the number of tokens or processing time, Coinbase Developer Platform confirmed.
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This update addresses a long-standing limitation in the protocol that prevents efficient payment for services whose costs are not known in advance.
“Until now, x402 has only supported fixed-rate micropayments. This works great with deterministic APIs. But it has blocked an entire category of services where the cost depends on usage, such as the number of tokens, compute time, or query complexity,” the Coinbase developer platform said.
The technical framework works as an implementation of the Ethereum Virtual Machine (EVM) that supports all ERC20 tokens. To further simplify the process, a CDP facilitator has been integrated to allow transactions without gas fees.
Under this new arrangement, sellers set a maximum price while buyers allow a spending limit for a particular task. Once the AI agent completes the request, the server calculates the exact cost and charges only the resources consumed.
This prevents the previous problem where users often overpay for simple tasks or underpay for complex tasks because the protocol cannot adapt to fluctuating server-side requirements.
Industry adoption of the x402 protocol has grown as companies prepare for the emergence of proxy commerce, a sector that requires fast and frictionless payments to handle high network demand.
While Coinbase originally developed the protocol, the company recently… transfer Ownership of the non-profit Linux Foundation. Big tech players, including Google, Microsoft, and Amazon Web Services, are in now Holding shares In the protocol through the x402 Foundation.
