Eric Reppel (4:00)

Yeah. So the Internet kind of runs on standards we have like HTTP and HTML and CSS and this enables computers to communicate with each other without a bespoke like per company way of declaring hey, I'm gonna this is how I'm gonna send you data. This is how I'm gonna this is how you should render my data to your in your browser. But we've never actually had that for money. There's never been a standard for how do you convey the intent to move value attached to the Internet or attached to a web request. And this is a problem that's gone back to the earliest days of the Internet. Marc Andreessen spent a bunch of time on this back in the 90s. You see kind of evidence of this in the HTTP 1.1 spec where the status code 402 was enshrined. And I have a party trick which is I can recite the entirety of the 402 spec. It's one line, it's reserved for future use. And AI has really kind of forced us to reevaluate this long required or this long unsolved problem of Internet native payments. Up until now, once we had HTTPs entering your credit card kind of worked. But that doesn't really scale for machine to machine payments and for AI agents to be able to pay each other.

Sam Ragsdale (5:18)

I think there's an additional interesting historical anecdote there, which is when they were building the browser, Mark Andreessen and Tim Berners Lee, in the 90s, they reserved the status code 402. And I think one of the reasons behind it is at the time in 1995, running a server was about two orders of magnitude more expensive than it is today. Lots of things happened in the past 30 years to bring that price down. But at the time it was like prohibitively expensive to put something on the Internet. And so when they were building the browser before ads existed, they asked themselves, like, what is going to be the incentive model for the Internet? Like, why would I put my server online? And then why would I respond to you if you ask my server to do some work and to give me some resources back? And the thing that was really, really obvious to them was that you would pay for it. You know, one server would pay another server to request resources or data from it. And so they reserved that 402 status code. But at the time, microtransactions didn't exist. This was like pre PayPal, there was barely credit cards on the Internet. And so there was no good way for machine to machine payments to happen. And you know, fast forward 30 years, you know, lots of blockchain developments, and now microtransactions are plausible again and it's a good time to circle back to it.

Laura Shin (6:28)

And so if it kind of was reserved for all those decades, then how was it that the, you know, x402 that we're talking about today, how did that come to be?

Eric Reppel (6:38)

Yeah, so I was thinking, I took some time off after leaving my last position and was thinking about what I wanted to spend time doing. And I came to, I came to the conclusion, like, we're going to need Internet native payments to really scale AI and started doing a bunch of research on all the attempts to do Internet native payments of the past. A fun fact is Brian Armstrong actually tried to do a 402 Internet native payment scheme back in 2015. And when I was re interviewing, when I was interviewing to rejoin Coinbase back in October of last year, I was talking to Brian and I was like, he asked me the question, like, what would you do if. What do you think we should be doing with Coinbase developer platform? And I said, I think one of the things we should be doing is creating a standard for these Internet native payments because I think it will really lead to the mass adoption of stablecoins and the proliferation of crypto across the Internet. Because stablecoins and modern blockchains just are the best way to move money that exists on the planet right now. And it's the only real way to move a 10, a 10th of a cent and not have the fees be like a disproportionate amount of the value transferred with traditional credit cards and traditional financial rails. Really 30 cents is the floor and the recipient will get $0 out of that because there's just a 30 cent fee attached to the transaction. And so I rejoined Coinbase and then I spent a bunch of time basically taking the research I'd done prior to joining Coinbase and formulating the X402 spec and the initial SDKs. And we put X4.2 out back in March at ETH Denver and showed it to some early, early partners and early builders, including the Solana foundation and a bunch of folks at East Denver. We knew from the start x4.2 needed to be multi chain and open and neutral to have any chance of getting adoption. And it's kind of grown from there. But it's a really old problem. I always want to make sure I make it super clear. This is just a problem that's existed for a long time and it's an idea whose time has come. AI is really the incumbent force where we should actually take this problem seriously and try to solve it.

Laura Shin (8:55)

Now let's talk about the fact that I'm sure there's some percentage of people who are going to listen to this and be like, I make payments online every day. So what is the difference between what, what you're building with x402 and what payments today like, you know, general, generally in the mainstream. What, what is the difference between those two?

Eric Reppel (9:19)

It's a great question. This is really subtle thing with engineering where the payment experience that you perform probably looks very similar from website to website. Like you're entering a credit card information, you're entering like the expiration cvv, your address and that forum on a webpage looks pretty similar in each website you go and buy something on. But what's happening from your browser to their server actually can be completely different on every website. In fact, it is completely different on every website. The interaction and the exchange of data is just not standardized at all. And that's also true from the person accepting payment. Their integration into PSP is actually completely different depending on the vendor that they choose. The Stripe API and the API and the checkout.com APIs are all completely different and require a robust integration. And so what x402 does is it makes it so like there's one thing to integrate and then you can accept payment regardless of the underlying mechanism. And why that's really powerful for AI is AI are probabilistic systems where they're not guaranteed to fill out that form the same way every time. And there's like 12 forms in a credit card, just 12 fields in a credit card form. You, your agent is not going to be able to fill those out correctly every single time. But if you give it a tool which just says hey, you can now structurally pay the same way that you can structurally make an HTTP request and ask for the content of an API or a website, it makes it a deterministic problem rather than a probabilistic problem.

Sam Ragsdale (10:56)

I would even go a step further, Having built on X402 quite a bit over the past month, which is that the devex is just fundamentally better. The devex being the developer experience. When you're doing checkouts with stablecoins it's much simpler either to pay somebody for something in stablecoins or receive money in stablecoins. One, there's just less work to integrate. Two, there's no chargebacks, chargebacks kind of creep. So this is the, any credit card transaction, any wire, any international wire can theoretically be clawed back at some level of escalating legal pressure. And with stablecoins you don't have that. And so it doesn't leak into the developer experience. It's much easier to send and receive money. And so when you're, when you're building one of these systems, you can much more easily integrate payments. And you don't have to create a legal relationship with a payment processor. You don't have to sign up with them, you don't have to exchange tax information, et cetera. You can just accept, accept self custodial money in form of stablecoins or, or other cryptocurrency.

Laura Shin (11:59)

Yeah, when I was learning about this I was feeling like, oh, this is like cash but digital. Is that how to think about it? Because like the protocol doesn't even use accounts.

Eric Reppel (12:08)

Totally. Yeah. The X402 is like super lightweight. Right. It's just a way to declare payments. It doesn't take custody of funds, it's not in flow of funds. It isn't actually even prescribing a like mechanism of payment. It just says like, hey, here's a common pattern to say here's how to give me money and then clear instructions for the customer on how to make that payment. And so cash is like I think stablecoins broadly just are like the closest digital analog that we have to cash.

Laura Shin (12:44)

Yeah, yeah, but so this was something that I was wondering because it's like chain agnostic. Are you in the background adding all these different chains constantly or how does it make it chain agnostic? I don't understand how that even works.

Eric Reppel (12:59)

So it comes down to the category of chain. And so what x402 does is it specifies the mechanism that a chain should utilize to move funds and a set of principles that should be adhered to per chain. So for any EVM chain, it works exactly the same way from a technical standpoint. And so whether it's Polygon or base or Ethereum, L1 or Avalanche C chain, they all use the exact same mechanism to move funds. And then similar for SVM chains, X402 basically enshrines like a canonical way to move money per chain. And then both the client and the server understand, hey, we're doing a transaction on base, okay, we're going to use EIP309 for a gasless transfer. And that allows consensus because it's actually like, there's the amazing thing about crypto, but also the thing that makes crypto payments complex is that there's actually a lot of ways to transfer tokens in crypto, at least from an engineering standpoint. And they all result in the same thing of me sending a dollar to you. But the way you code it up, the way that you actually build against it has a huge. There's many different Options. And so X402 basically prescribes, hey, this is the way to do it. This is like how to form the connective tissue for payment across each chain.

Laura Shin (14:23)

Okay, wait, so is it almost like the chains have to add it in a way? Like if it requires an EIP for any EVM chain, then it's like, what is it, a SIMD or whatever on Solana? Is that how that works? Oh, okay, now I get.

Eric Reppel (14:41)

Doesn't actually require a bespoke, like, integration per chain. It's. It's. Each chain kind of decides like, hey, here's the best way to move money on our chain, given these goals. And the goals are like, high ux, don't require gas, don't make it so that there's no like, flow of funds or custody. Make it so that the client can only is only moving funds that they've authorized to move and there's no risk of them moving funds that they haven't authorized to move. And given those like, requirements, I work with Each foundation basically, to enshrine like, this is the best way to accomplish those goals using the mechanisms already available on our blockchain.

Laura Shin (15:18)

Okay.

Sam Ragsdale (15:18)

I have historically analogized it to ERC20. I think that is quite a helpful mental model for what a standard is. By creating a standard for what represents a token or a transferable fungible token on a given chain, you kind of create a network effect around integrations. Any DEX or any DEFI protocol or any payment processor that accepts ERC20, they benefit from everybody else accepting ERC20, because then there's not multiple forms of ways to collect money. And Everybody can hold ERC20 in their wallets. They can put ERC20 into their Dexes, they can put it into their lending protocols, they can pay for NFTs with it, et cetera. But it doesn't necessarily require deploying any code to make the RC20 standard. You just make a standard way for people to transmit value on a given chain. And then solana has the SPL tokens as well. And I would say that X402 is very similar there. It's just a means that every merchant and every buyer can say, I would like to integrate with X402. I would like to access X402 resources. And they all benefit from everybody else agreeing to use a single standard.

Laura Shin (16:30)

Okay. But it does require, like, a decision by each blockchain community in a way to adopt that standard is okay, totally.

Eric Reppel (16:39)

This is kind of the difference between a standard and a protocol, in my opinion, where a standard is actually just social convention and kind of like an agreement amongst parties to do something in a certain way. Whereas a protocol involves deploying new code to the blockchain and saying, oh, we're going to all use this smart contract. Standard is really just an organizing principle and an agreement from people to do a thing in a certain way, but you can't actually enforce it. It's just that if you don't follow the standard, you lose the network effects and the ecosystem compatibility and the social convention, and things just break if you don't follow those standards.

Laura Shin (17:14)

Okay, okay. Before we keep going into how it works and all that, let's get Sam's backstory, because we talked about how Eric came to be working on this. So, Sam, tell us how you came to be working as a developer using X402.

Sam Ragsdale (17:29)

Yeah. So I'm CEO of a company called Merit Systems. We've been around for about a year. Our goal is to help developers monetize their code on the Internet. We have a product Called Terminal, that is like a bank account for every GitHub, repo runs on base, uses stablecoins under the hood. And then we've been launching tools to help people monetize directly out of those instances. We launched an AI product that runs largely on credit cards today. And then we launched a bunch of X402 products. And when we entered the X402 ecosystem in around September, there were some ecosystem wide things that we thought we could spruce up and help fix. Which one was Discoverability. It was quite hard to find the resources and then once you found them, it was quite hard to call them as well. The way that people were doing it at the time was that people would have fully integrated web apps where they had a client and a server. This is just a normal website to most people. This is what we're familiar with from Defi. Most of the time when you call uniswap, you do it through the Uniswap front end. When you call Curve, you do it through the curve, front end, et cetera. And I think x402, the dream of it is sort of multi client, multi server, where you have many different ways, many different front ends for calling the same resource. In fact, you can compose them together. And so that was the second thing we thought we might be able to help with and fix. And then the third was helping with composability in the ecosystem. The dream is sort of you could have a bunch of different servers that offer different resources and you can use an AI agent on top of it to compose like a single end request. And so I think I don't want to steal this one from you, Eric, but an example Eric likes to use is the. I would like to plan a vacation. You know, I want to go to Canada for the winter to go skiing and I need to, you know, get some flights, I need to get a hotel, I maybe need some restaurant recommendations and then I need to rent some, some skis as well. And all of those would be different providers, but an agent theoretically would be able to chain all of the requests together. And so far in the ecosystem as of September, it was quite hard to do that. There wasn't really a canonical interface for doing it and there was like some technical difficulties around doing it. And so we put our heads together, the seven of us, and came up with X402 scan. You can find it at x402scan.com it's simultaneously a discovery layer that gives you great analytics over the X402 ecosystem. You can understand who is transacting what merchants are accepting money in what currencies on what chains. And then I think more excitingly, you can then also call all of those resources. So it's like kind of like a browser for the X402 ecosystem, which allows you to see all of the X402 resources and directly in line, you can go and you can fetch those resources. And then I think about a week and a half after launch, we, we launched Composer to fix the last, or to try to fix the last leg of this, which is sort of chatgpt, except with an embedded wallet that allows you to call all of the resources, which really helps developers when they're thinking about what resources to build they can build for Composer and then future clients that look like Composer and build resources that compose nicely and have kind of a shape that makes sense to work with an AI agent.

Laura Shin (20:43)

Okay, and that, that last bit is sort of like a front end. Is that how to think about it?

Eric Reppel (20:49)

Like.

Sam Ragsdale (20:49)

Yeah, exactly.

Laura Shin (20:50)

Okay. Yeah.

Sam Ragsdale (20:51)

Rather than the, the analog you should think of for x402 scan. And why it's named this way is, is because if it's like, it's like Etherscan, which we're very familiar with from Defi. The bit that we've, we've added on top of it is sort of like Composer, which is an AI agent that can also call all of the resources available on X402.

Laura Shin (21:10)

Okay, okay, this is so interesting. So you know, what you just described is kind of like from the developer side. So now let's completely flip over to a different angle, which is. So let's project at some point in the future when X402 is widely used. I'd love to hear you kind of walk me through. From a customer or everyday person's perspective, what would a transaction look like that would be using X402 in the background, that they might not even know that that's what's going on?

Eric Reppel (21:42)

I think the bit you hit there is exactly right, Lauren. Laura, which is they may not even know it's going on. I think x402 success cases that people don't think about x402 at all.

Sam Ragsdale (21:55)

Right.

Eric Reppel (21:55)

Like, people don't think about htp, normal people don't think about HTTP on a daily basis. But what it enables you to do is like this narrative of agentic commerce actually becoming like a real thing where your agent, your chat interface may be doing like hundreds of small transactions in the background to make it better at performing tasks for you without you even realizing and so let's take Sam's booking a trip to Canada example. You may only want to go to Alberta when there's fresh snow. And so your AI agent may pay like a 10 cents to get like a super accurate weather forecast of when in the next month is it most likely to be fresh powder in Alberta. And then recommend, hey, you should go on these dates based on the weather forecast. And this kind of like 10 cent purchase for access to better data to make decisions for you that can happen in the background is like net new and net novel because you can make these small transactions with stablecoins. And so in theory, like as a consumer, your agent just gets better at serving you and your agent now has like a budget that you give it to enable it to perform these tasks better on your behalf.

Laura Shin (23:11)

That is so interesting. Keep going, Sam.

Sam Ragsdale (23:15)

Yeah, I think another example I like is a lot of the news companies are struggling right now with the decline of advertising revenue and people's lack of interest in paying for news. Maybe. And so one of the models people are thinking about is usage based pricing. You have a paywall in front of each article and maybe you pay a dollar per article rather than paying $5 a month. And you could imagine waking up in the morning and saying, I want to pay $5 for my custom newspaper. And then your agent goes and goes through, you know, the, the 50 different news sites, picks, headers that it wants to buy. It buys the top five that you're most interested in based on your personality. And then it makes sort of a perfect news briefing for you in the morning while you're brushing your teeth.

Laura Shin (23:58)

Wow.

Eric Reppel (23:59)

And it creates a new revenue stream for all these news sites, right? Where instead of them getting scraped by the chat agents and getting disintermediated from their users without having a clear path to monetization, now they're getting paid 50 cents for the agent to take those articles and present them to the human. And you're getting like a higher quality news experience for paying like a dollar to get that like aggregation from your chat interface.

Laura Shin (24:27)

Okay, you guys, this is hilarious. I don't know if you specifically picked that example because I have been quite vocal about how I think the media business models are broken and, and that I am very interested in crypto ways that that can be fixed. So I love that. And I'm like, oh, maybe we can, maybe we can add this to our site. So okay, so you just, we just described how this might look in the future once this is adopted from the user's angle. So Then on the back end, is it what you were talking about where the agent. So, okay, but in this world, I guess like all of these different, like company or like, yeah, stores, like whatever businesses are offering these services that the agents are using, they will have to accept it and adopt it. Right. So what does that look like? Are you trying to do similar things to the, you know, coinbase deal with Shopify, you know, to. To accept stablecoin payments on base? Like, is like, do you have to go to. To merchants to get them to adopt it or how does that part happen?

Eric Reppel (25:32)

One of the nice things about it being an open standard is that CDP is more than happy to help people adopt stablecoins. And we have great tools that make it easier to accept stablecoins.

Laura Shin (25:42)

But it works with coinbase Developer Program cdp.

Eric Reppel (25:46)

Coinbase Developer Platform.

Laura Shin (25:48)

Platform, right.

Eric Reppel (25:49)

Yeah, we're still working on brand awareness. We have great tools, but you don't have to use our tools to do it. Right. If you have a wallet to accept stablecoins to, you can get started with X 402 incredibly easily. As Sam alluded to, me and my team have spent a huge amount of time trying to make the developer experience really amazing for x402. And so we typically see companies being able to add X402 to support to their APIs or to their websites in under an hour. And it's really as simple as one line of code and then having a wallet that you can set to accept stablecoins. Or you could, you know, if you're a business, you can open a coinbase business account and then accept stablecoins to your coinbase business account and then send off to your bank account via Coinbase. But it really is like, because there's a standard way of doing it, you can create really robust libraries that make it trivial to do. And there's like one way to do it, and that's the power of standards, is that it kind of removes all the questions and just tells you, here's how you should do stablecoin acceptance. If you want to use the X4.2 standard, it's. Everyone's abstracted it away from you. The tooling is really good. Everyone's using the same conventions. People know how to buy from you and they don't have to figure out how to pay you every time. It's all just, there's one way to do it. There's a convention on how to perform that payment.

Sam Ragsdale (27:11)

And I would add two things there, which is one, that it's definitely easier to integrate x402 than it is to integrate like checkout with Western Union or something like that. Accepting stablecoins is really easy. You add an address and then like add a new API or add. It's quite simple. And then two is that you don't need to ask anybody's permission to accept checkout next 402. Like this is a. The thing that's fundamentally better about crypto than the existing payment Rails is that every other way of accepting digital or virtual currency via credit card or wire or ach, rtp, whatever, you always ask somebody's permission. You know, you go and you sign a legal agreement and then you, you know, they can kick you off at any time. You have to abide by their terms of service, all that stuff, which some of that might be good, but it is fundamentally better if you have self custodial money that you can just sign up yourself. You can be this long tail, you can accept payments for anything. You don't have to ask anybody's permission to get paid.

Laura Shin (28:10)

And one other thing that I was just thinking about, you know, you described it as the standard and you know, it's just a way for everyone to agree on how this should be handled. But I was wondering, are there competing standards as well? Like because crypto, you know, it's not new. So there are there other, you know, people that are saying, hey, actually we think this way of doing it is better and so is there competition.

Eric Reppel (28:37)

I think within the crypto ecosystem there's been a few people who have kind of like forked, but actually most of them have come back back to X 402 as a standard. I think a lot of the reason for people forking, especially in the early days, was thinking that coinbase was going to turn this into like a base only thing or a coinbase specific thing. But we really genuinely want this to be a open, neutral standard that isn't governed or controlled by Coinbase unilaterally. Which is why we're actually moving X42 into a foundation. And so it'll be governed in a similar fashion to how all like open standards or programming languages are governed, where multiple companies can come together and collaborate and there's no like unilateral control by one entity. And so we announced a couple of months ago that Coinbase and Cloudflare will be the two. Coinbase and Cloudflare will be THE two founding members of the X402 foundation, but there'll be plenty more. And Cloudflare will be using X402 to allow their customers to accept pay per crawl. So anyone who's hosting a website on Cloudflare will be able to use X402 and accept payment if an agent is trying to access their content. And so the kind of integration becomes like one click in theory from the cloud if you use cloudflare as your host.

Laura Shin (29:59)

Okay, super interesting. All right, so one other thing that I wondered is, so as we talked about, we have these existing payments on the Internet that most people think work okay, and then now we have this new standard happening. So in the future, do you think that it'll be kind of like snail mail and email where they coexist? And if so, then how do you think the payments landscape will change? Like, which types of transactions do you expect will be done with, you know, this kind of technology versus which ones will just remain sort of the ones that we've had so far?

Eric Reppel (30:40)

So there's this category of agentic commerce. It's kind of like, who knows what it means at this point. I'll give you a definition that I like to use because I think it's a good reference point, is agentic commerce is like any purchase initiated by an LLM. And those fall into two categories. One is conversational commerce, where the human is like very much in the loop and you know, your AI agent, your opening, your ChatGPT is doing research for you and then at the end saying like, hey, these are the shoes that you should buy and you just click yes. And then there's this autonomous commerce, which is more the example of purchasing data or APIs or tools that make the agent more effective at its job. The example being paying for a weather forecast for Alberta to know when you should go skiing. And x402 is, is better for both, but it's, it's orders of magnitude better for autonomous payments because these autonomous payments are going to be much smaller in size and stablecoins are just much better suited to handle small, frequent transactions compared to existing Rails. But the advantage of accepting x402 is it can do both. You can transfer a tenth of a cent with x402, or you could transfer a billion dollars. And what I think we're going to see is as consumers start to have more access to stablecoins and as the friction to add stablecoins to these interfaces that humans have increases, we'll see like a shift where in the start it's largely autonomous Commerce that uses x402, and over time it's All Commerce that can use x402. I think it's always worth calling out as well. There's nothing about X402 that makes it crypto only and so you actually could do fiat transactions using the X402 standard and I suspect we will have that. And I suspect a really common pattern you'll see is stablecoins and x402 used for the small information and that equivalent of the pay for data example and then credit cards being used for the large oh, I'm booking the flight now and so I want some consumer protections and I want, I want to put it on credit rather than having to actually have the funds available to purchase that. And both those transactions are expressed via x4.2, but the payment network actually depends on what is more optimal for the type of purchase.

Laura Shin (33:03)

Okay, so I want to ask more about that, but first we are going to take a quick word from the sponsors to make the show possible. Hey founders and developers, if you're looking to bring on chain trading to your product, wallet or platform, check out the new Uniswap Trading API from Uniswap Labs. It's your plug and play gateway to global on chain liquidity. No deep crypto expertise required and no need to manage complex integrations or ongoing maintenance. With the Uniswap Trading API you'll get enterprise grade on chain execution, combining both on chain and off chain sources for the most competitive prices. Simply put, more liquidity, less complexity. And this isn't just any API, it connects directly to the Uniswap protocol which has securely processed over $3.3 trillion in total volume with zero hacks. So stop worrying about liquidity infrastructure and focus on building your product. Get access to the same liquidity that powers billions in swaps through one powerful API. Visit hub.uniswap.org to learn more. Mantle leads the establishment of Blockchain for Banking as the next frontier UR is the access layer that transforms Mantle Network into a purpose built vertical platform. The Blockchain for Banking that enables financial services on chain UR unifies and vertically aligns Mantle's focus on payments, trading and assets. MI4 Functions FBTC supported by developer grants, ecosystem incentives and the industry leading distribution platform through the UR app, rewardstation and Bybit launch pool. All economic activity within UR will be captured by Mantle Network to further drive value to token holders and establish its significance in Blockchain for banking. Follow MantleOfficial to learn more. Back to my conversation with Sam and Eric so I just wanted to ask a little bit more about what you said. Where you've said that you felt the standard could be used to move fiat money. Like, you mean like literal analog money in bank accounts that you know, could get lost in wires. And like, what does that mean?

Eric Reppel (35:15)

Yeah, there's nothing about export to that makes it that would prohibit you from using ACH or SEPA or a wire. A transaction on the Visa Network or MasterCard Network. Again, X 402 is really just an enshrined set of agreed upon practices on how to initiate those things. And so you could absolutely use X402 to convey wire instructions. Wire might be a little tricky because usually they have to call someone, but ach, Right. You could easily integrate ach. In fact, back in, I think April, a former Stripe employee who now I'm blanking on the company he works on now, but he found X 402 and actually integrated Stripe's API into X 402 and let you do X 402 transactions on Stripe. This was kind of like, you know, a non sanctioned kind of like hack. Wasn't officially endorsed by Stripe, but it just worked and he was able to do it because ultimately it's just conventions on how to perform the payment versus like actually dictating anything about what the payment does.

Laura Shin (36:17)

Okay, this is super interesting. So one other thing that I didn't understand is as we mentioned before, it has zero fees for either the customer or the merchant. We're so used to blockchains charging for transactions, so I don't understand how that can be.

Eric Reppel (36:34)

This is a really great point. So the protocol or the standard itself doesn't enshrine a fee. It doesn't say like, hey, you must pay this person this amount in part because there's no way to enforce that.

Sam Ragsdale (36:47)

Right.

Eric Reppel (36:48)

Like you could just simply opt not to. There may be fees that are associated depending on the underlying network. Like if you're, if the network is Stripe, there's going to be fees associated with Stripe that come into play. And there may be gas that's involved in the chain. And so the merchant may need to pay gas or may need to have a relationship with what's called a facilitator in the X402 spec, which is think of a facilitator as just a way to abstract away the complexities of crypto from people who are new to crypto and they may charge like some gas plus like a small premium in order to transact. But there's no percentage based fee, there's no fixed like minimum fee that's actually encapsulated in the standard. It's we kind of leave the economics to be determined by either the relationship between the merchant and the facilitator, or the merchant can just go directly to the chain and implement the X4.2 standard themselves and interact directly with the blockchain if they. And that means that their costs are just the gas of whichever networks they choose to accept payments on.

Laura Shin (37:56)

Oh, so it doesn't remove gas?

Eric Reppel (37:59)

No, no, there's an abstraction for gas. And right now all the facilitators are kind of just eating the cost of gas. But unfortunately I haven't managed to just make gas go away. It exists. It's just there's no additional fees compared to the fees of gas. And the great thing about that is as chains continue to get more and more efficient and cheaper and cheaper, you're just paying the root costs of the transfer. There's no additional fees on top of the fees of the blockchain. And we've seen the price to the gas cost to transfer. USDC has gone from like $10 in 2020 to a hundredth of a cent typically in 2020, 2026, now 2025.

Sam Ragsdale (38:45)

And most of the chains, most of the chains are the foundations or somebody related to the chain is subsidizing all the gas costs associated with X402 today. Hard to say how long that will go on. But that means that for people transacting, either merchants or consumers, it is actually, you know, gas free or gas cost free to do x402 transactions today.

Laura Shin (39:10)

Yeah, you know what's really interesting? I just realized this would be the kind of thing where merchants would be very incentivized to adopt it. But at least in the US it probably other jurisdictions are a little bit different. But in the US when, where people get perks on their credit cards, they might be less interested. So it's going to be like a weird little push and pull for some period. But actually, I did want to ask earlier because you also mentioned this. You know that chargebacks don't exist with this. So, you know, if I do buy something and then I realize like, oh, it doesn't fit or I don't like it or you know, whatever, then how, you know, how does that get handled?

Eric Reppel (39:51)

So at some point we are going to need to handle the charge rack problem. One of the things. But I think right now we're just trying to create convention on how to perform the equivalent of me handing you $1. If I hand you a dollar and you walk away and I don't know you, like, I have no way of getting that dollar back. And so eventually we're going to need to create more complex forms of commerce where there's this concept of chargebacks and reputation and disintermediation. And. But those are like very difficult problems that you need to progressively build up to. And I think the place to start is this like $1 concept, right, where I'm handing you 20 cents to call your API.x402 kind of foresees this problem and has this concept of a scheme encoded in the spec. And the scheme is, you can think of it as the logical way of moving money. And so the first scheme that we launched is called Exact, which just says, I'm paying you exactly $1. But you can imagine a scheme that has the logic of a chargeback and then there's some intermediary that acts as like the, the, the determinant of like, can this be charged back or not? Or there's like some policy where the client can file a complaint and affect the reputation and pull money back at a future time. And that may be like a new scheme, but there's so much complexity that goes into that. And especially when you have like, automated movement of funds. Like what would prevent a client from always asking for their funds back? Right. Chargebacks are like a human process right now, but if you automatically could just say, like, oh, give me my money back, an AI could just purchase from you and then take the money back right away. And so you have kind of the opposite problem as well.

Sam Ragsdale (41:41)

So I've been having the chargeback argument for many years now with people around stablecoins, which is that I think it's fundamentally better to have a system that does not have chargebacks. Like, I think it's something that we've grandfathered in since like, you know, the credit, the early credit card days when credit cards were, were processed by fax. I actually think you totally can have an economy that works without chargebacks, which is that you go to the merchant, you know, you hand them your $10 in cash and you buy your jacket and then you come back with your jacket and you say, this is bad jacket. I would like my $10 back. And if they don't give you your $10 back, then you know they're a bad merchant and you'll go and tell everybody they're a horrible merchant and you shouldn't use them, and then people will stop buying from them. And so I think you can actually just have an economy that runs on merchant reputation that does not have like credit card companies able to do the Clawback at the level of the transaction. Like, I don't think it belongs in the money protocol at all.

Laura Shin (42:36)

Interesting, huh? But okay, but I guess like, yeah, if the merchant refuses, then the customer just is screwed. And I mean, maybe, maybe it's like, you know, not $10, maybe it's like $500 or, you know, $1,000 or whatever.

Sam Ragsdale (42:54)

So I think you could have consumer protections like you do now, right? Like the government could be in charge of making sure that, you know, in the case that the shop says this is a refundable purchase and you will be able to get your money back if you don't want it in 30 days and that's sort of part of their legal agreement around buying, then if they don't give you your, you know, a thousand dollars back when you return the jacket, you can go to the, the government or you can sue them, you can take them to court and they can give, give money back. And then that's enough of an incentive that that will almost never happen. Like, I, I don't know how that obligation moved to the credit card companies, but it never really made sense to me.

Eric Reppel (43:32)

Huh.

Laura Shin (43:33)

Okay.

Eric Reppel (43:34)

I think too, in, in your example, Laura, this is where being able to use multiple payment networks and multiple ways of making a payment and commingling them is really valuable. And so with X402, you can actually say there's multiple ways to pay me. You can pay me with USDC on base or USDT on Solana. And in future maybe you can say, oh, I also accept Visa payment. And you may as a consumer choose like, oh, this is like a $500 purchase. So I actually want to pay a bit of a premium to put this on my Visa so that I can do a chargeback in the future if I need to. Or there might be a bit of a discount if you're just paying with USDC because there's no like Visa network fee associated with it. So maybe things are just 3% cheaper if you're paying with stablecoins versus visa. And so you can actually commingle these where, like if you, if you're making a 10 cent purchase, are you super concerned about charging it back? I would probably agree with Sam in that case. But if you're making a $500 purchase, you may want to pay a little bit more to have those protections and have that like arbiter of was the, was the service delivered, who you can go and complain to and potentially get a charge back from?

Laura Shin (44:44)

Okay, okay, yeah, that makes a lot of sense. All right. So let's now talk about some of the other. I don't. Yeah, I think some of these are protocols or just like integrations or something. So one of them is Payments mcp. Another one that I saw being talked about was the Google A2A agent to agent protocol. You know, talk a little bit about both of Those and how X402 works with those.

Eric Reppel (45:12)

Yeah, so Payments MCP is a product that Coinbase created that gives any MCP compatible chat interface such as Claude access to an embedded wallet, access to the discovery layer of x 402. So it can find different services that are available on X 402 and then the ability to pay for these services. And so you run like you install Payments McP and now Claude can go and purchase anything that's available in the X4.2 ecosystem on your behalf. And you can give Claude like a dedicated wallet. You can control spend permissions on the wallet. You can create like very sophisticated guardrails for your AI to purchase because money is like fully programmable. You can create UX user experiences that are like extremely safe by just saying, hey, you're not allowed to spend more than a dollar. And that's like enforced in code in the client. And what that lets cloud do is it's this like more powerful AI thing that we've been talking about where now CLAUDE can actually pay to access data that's behind resources or behind paywalls for me, or pay to use tools that it doesn't actually have access to. And there's this kind of dynamic ecosystem of anything that accepts XOR2 is now available to use versus me having to go in and manually integrate one MCP tool at a time. And then ADA is a collaboration we did with Google where ADA is a standard for agent to agent communication. And so it's, it's a very full stack way for agents to communicate with each other. And we worked with Google to create a native integration to a, to A that allows those agents to then pay each other using x402. And for all the same reasons. Stablecoins are great for small payments. Agents are also great for agents paying each other because typically an agent's not going to need to pay another agent like a thousand dollars. It's usually like sub dollar transactions.

Laura Shin (47:12)

Okay, all right, super interesting. So now let's talk about apps because I'm sure there's a lot of things being built on this and a lot of things maybe that already are being built or have been built that are exciting to you. So what are Some of your favorite apps that either already exist or that you're seeing being built.

Sam Ragsdale (47:32)

Yeah, so. So we, we look at a lot of this data. I think a lot of the resources, vast majority are listed on X402 scan. So I pour over time. I think it is important to note. So there's about, we've done about in the past month, about $13 million of volume transacted across base in Salana and USDC, which is the vast majority of it, and about 20 million transactions now. So numbers are definitely up and to the right. The vast majority of those are meme coins which is slowly dying off. But there is a long tail of builders that have come in that are building non speculative resources. Resources.

Laura Shin (48:10)

So just sorry, because of the way that we were talking about like how it's being used. So how are people using x4.2 with meme coins? Like what are they doing with those?

Sam Ragsdale (48:19)

It is not particularly sophisticated. They put up a resource that is/mint and then it gives them meme coins. Which I will note is not a particularly good way to mint a meme coin. You would prefer to do it through a smart contract. But it is important to note because if you go on X402 scan, which is a great way to explore the resources, you'll See the top 10 by volume are meme coins. So I wanted to call that out very explicitly.

Eric Reppel (48:45)

It's basically you're throwing up an API and what that API does is sends you a meme coin.

Laura Shin (48:53)

Okay. So it's just like people are basically having fun with it, I guess.

Sam Ragsdale (48:56)

Yes, exactly.

Eric Reppel (48:58)

People in crypto are doing what people in crypto do, which is launch meme coins mess around. But I think to Sam's point is what has been really gratifying for me to see is it's brought so much attention to x402 and brought in this whole new class of builders that are building higher utility more in my opinion, interesting use cases that I think are going to be much higher traction, but they take more time to build because they tend to be more sophisticated and doing more complex things than just sending you a meme coin.

Sam Ragsdale (49:28)

Yeah, we've seen about 100, depending on the day, between 100 and 1,000 new resources a day. And I would say like at this point under 20% of those are meme coins. So the vast majority of new resources are non meme coin related. Despite the fact that the most of the usage by volume is meme coins. I think the ones that are most interesting that people are building today, there's a lot of like these crypto search ones. So aixbt, for example, which is big on Twitter, they have a vector search of all of crypto Twitter. So they've scraped all of crypto Twitter and then you can search against that data is typically very hard to access. A bunch of people have done that for token pricing, people have done that for crypto news. And so I think that's particularly interesting. Some people have done the Twitter API. There is all of the AI resources are available. So your top model providers, so OpenAI, Anthropic, Gemini, et cetera, you can access over X402. Same for the generative AI ones. So the image gen, image image editing and then video gen as well. And then increasingly recently, which I'm excited about, there's a lot of the open source custom models that people have fine tuned for, you know, a lot of the Chinese Kwan models that people fine tune for making a face or making an action movie or something like that, which I think is particularly cool because it would be very hard to access those otherwise. You need very expensive GPU resources. And for people to be able to spend 10 cents to get a quen generation rather than, you know, spend two weeks getting an H100 on Amazon Web Services, I think it's pretty cool and we're excited about it.

Eric Reppel (51:06)

What I'd add is the thing that's really powerful about X4 too is that you don't need to create a direct relationship with every single buyer. You don't need to go and get an API key. And so you get really good composability of the different resources. And so instead of traditionally I'd have to go and like sign up for an API key to do image generation and then sign up for an API key to, you know, get access to some data API because they're all different products and that's like really gnarly and hard to do. But you start to be able to chain these calls together and create these like workflows that are dynamic and these agents that are much more dynamic in their capabilities than traditional AI agents. And so I'll tell you my favorite one, which is there's someone created a API where you send it an image and an address and $20 and it mails you a T shirt. And so what you could do is you can pay to search for the latest news that's happened for the day and then pay to have an LLM summarize that news into a prompt, then pay for an image to be generated for that the day's news and then pay for a T shirt that represents the day's news to be shipped to your address. And this just all can be composed together and you don't have to sign up. In theory, you could do all of that from one chat interface without ever leaving the chat interface.

Laura Shin (52:23)

That's really cool.

Sam Ragsdale (52:24)

Called shirt Sh. Try it out today.

Laura Shin (52:27)

Okay. I love it. I know Eric has to run in a couple minutes, but before he goes, I have to ask about one thing which somebody alluded to briefly. As we know when the bots get released on the Internet, there can be a lot of kind of spammy and scammy activities that happen. So, you know, is there a way to kind of figure out like what, like just if you're interacting with an agent, whether or not it's one of those or how to prevent that type of behavior?

Eric Reppel (52:59)

Yeah. What you're talking about is reputation and discovery. And there's a EIP that was put out by the Ethereum Foundation's AI division called EIP8004 that I'm a co signer of. I think 8004 is a great launching place to start thinking about these problems, but these are really hard problems. I don't think x402 solves every problem. Right. It doesn't try to. It tries to solve one problem quite well. But to get to a fully agentic Internet, we're going to need multiple standards.

Laura Shin (53:28)

And we just understand basically people just leave reviews of different agents that they've interacted with. Is that how that works?

Eric Reppel (53:35)

Correct? Yeah, it's kind of. You can think of it as like Yelp for services and AI agents and. But you're going to need these concepts of reputation to create like a robust agent economy. It's just that I think that reputation is less obvious how to solve than payments are. And so as the space evolves, we're going to have more and more standards that kind of can get combined to create a robust ecosystem. The analogy I make a lot is like the Internet wasn't super useful and it was just HTTP. We needed HTTP and HTML and CSS and JavaScript in order to create the like experience that we have today. But each one of those is kind of like an independent thing that needs to be built up. And so I think absolutely, we just need to start experimenting and pushing the ball forward. And we're super early on all of this stuff. And so I think movement and just trying stuff is the key right now.

Sam Ragsdale (54:34)

And then to add on to your analogy, HTTP, HTML, CSS and then search and notably page rank so that you can surface the stuff that's actually good and high reputation and people can access it and be certain they'll get the services they asked for.

Laura Shin (54:51)

Okay, great. Well you guys, this was so fun. Thank you so much. I really enjoyed Learning all about Expo 2 and getting a glimpse of our agentic commerce future.

Sam Ragsdale (55:01)

Thank you for having me.

Eric Reppel (55:03)

Yeah, it's been a blast. Thanks.

Laura Shin (55:05)

Welcome to this week's news recap. Let's begin. Uniswap proposes fee switch an $800 million token burn in major overhaul Uniswap leaders have unveiled a sweeping proposal that would activate long discussed protocol fees and introduce a large scale Uni token burn. The plan would route a share of swap fees into a quote token jar, allowing users to burn uni and withdraw an equivalent amount of crypto, reducing supply while tying the token more closely to the protocol's revenue. The proposal also calls for retroactively burning nearly 100 million unique worth about $800 million, representing fees that would have been captured had this mechanism existed. Since launch, it is backed by Uniswap Labs, the Uniswap foundation and founder Hayden Adams. Labs has been unable to meaningfully participate in Uniswap governance that ends today, adams wrote. If approved, the foundation would eventually wind down, with most responsibilities shifting to Uniswap Labs. Additional features include MEV discount auctions, aggregator hooks for V4 and an end to Lab's front end interface fees. Coinbase reopens US retail access to token sales with new launch platform Coinbase has introduced a public token sales platform that will allow everyday investors worldwide, including those in the US to join token launches for the first time since the 2018 ICO crackdown. The first sale will feature Monad's Moon token from November 17th to November 22nd, ahead of the project's mainnet release on November 24th. QUOTE Token launches needed a change, so we built it, the exchange said, emphasizing a design meant to avoid first come dynamics. Coinbase is using a quote filling up from the bottom end quote allocation model to broaden distribution and limit concentration among large buyers. Users who rapidly sell their tokens may see reduced allocations in future launches. Coinbase requires issuers to provide detailed project disclosures and enforces a six month lockup on token sales by teams and affiliates. The platform follows last month's $375 million acquisition of Ekko, though Coinbase said the new marketplace operates separately. The company expects to host about one sale per month with purchases made in usdc. Senate Agriculture Committee releases Draft crypto Market structure bill the Senate Agriculture Committee has published a draft of its digital asset market structure bill, marking a key step toward the Senate's version of the House passed Clarity Act. The text, led by Chair John Boozman and Senator Cory Booker, outlines how the Commodity Futures Trading Commission would oversee spot crypto markets and where its authority would intersect with the securities and Exchange Commission. The draft defines core terms such as blockchain, directs the CFTC and SEC to issue joint rules, and classifies major assets like Bitcoin and ether as digital commodities. Several sections remain bracketed, signaling unresolved questions including how to address decentralized Finance Committee staff worked through the weekend to finalize the draft, even as Congress negotiated to end the government shutdown. The legislation faces a long path. It must be reconciled with the Senate Banking Committee's own draft before either panel can advance a final bill. Industry groups said the document offers the clearest view yet of the regulatory framework taking shape. On Unchained's new show, Dex in the City, crypto lawyer V. Lee said she doesn't expect a market structure bill to pass until 2027. Hyperliquid activates emergency lock after Popcat trades trigger a vault loss Hyperliquid briefly paused Arbitrum based deposits and withdrawals on Wednesday after a trader's leveraged positions in the popcat meme coin triggered significant losses for the exchange's community owned vault. The platform's arbitrum bridge activated its quote emergency lock function as the issue unfolded. According to On Chain Data, a series of trades tied to an individual who split $3 million across 19 wallets resulted in more than $20 million in long POPCAT positions. Those accounts were later liquidated as the token's price fell, leaving the Vault with nearly $5 million in losses. Blockchain analytics firm Arkham described the activity as quote, passing $5 million of bad debt to Hyper Liquid's liquidity provider. HyperLiquid halted transfers to manually close the position, a step developer Ilyansync said was necessary while the team confirmed system stability. Quote the arbitrum bridge's automatic locking was triggered by a conservative set of conditions, and the bridge was unlocked after the situation was thoroughly investigated within around 25 minutes, they said. On Discord. Normal withdrawals resumed soon after, and Hyperliquid said the blockchain itself remained unaffected. Aero Platform aims to merge two major Dexes into one cross chain hub the team behind Aerodrome on Base and Velodrome on Optimism is preparing to merge both exchanges into a single platform called Aero. The project comes from the group now formally identified as Dromos Labs, the developer overseeing both Dexs, which together handle hundreds of millions in liquidity across the EVM ecosystem. Aero is designed as a central liquidity hub that will first expand to Ethereum Mainnet and Circle's Arch chain. Aerodrome has been successful on base and is excited to expand to effectively service other Ethereum networks via Aero, CEO Alexander Cutler said. Executive Director Luis de la Cerda added that Arrow's Unified token will, quote, serve as a claim on the productive capacity of the platform. The launch is paired with MetaDex03, an upgraded operating system that introduces slipstream V3 for capturing MEV related value and MetaSwaps for cross chain trades. CFO Dan Wick said the new architecture could lift revenues by 40% while cutting costs by $34 million. Circle Waze new token for Ark network as Q3 results beat expectations Circle, the issuer of the 73.7 billion USDC stablecoin, said it is quote, exploring the possibility of launching a new token tied to Ark, its stablecoin focused Layer one blockchain. The company said the asset would help, quote, align the interests of Ark stakeholders as adoption grows. Ark debuted in August and opened its public testnet in October, drawing more than 100 participants including BlackRock, Amazon Web Services and Standard Chartered. The potential token would support Circle's push to bring more programmable finance on chain. The announcement came alongside strong third quarter earnings. Circle reported $740 million in total revenue and reserve income, up 66% from last year and $214 million in net income. USDC circulation rose 108% year over year as reserve income climbed to $711 million. We made huge progress delivering platforms for the world's leading startups and financial firms, CEO Jeremy Allaire said, noting accelerating demand for USDC across payments and market infrastructure. Polymarket quietly re enters US market with beta rollout Polymarket has begun live testing its US Exchange, marking its first steps back into the American market since resolving regulatory issues three years ago. Founder Shane Coplin said the platform is quote, actually live and operational, with select users already onboarding and placing real trades as part of a controlled beta. The relaunch follows Polymarket's move offshore and a $1.4 million penalty paid to the Commodity Futures Trading Commission. In 2022, with investigations from both the CFTC and the Justice Department now closed, the company acquired qcx, a CFTC authorized exchange and clearinghouse, allowing it to operate legally in the US Quote it's the fastest anyone has ever gotten to market Coplin said at a conference in Miami. Polymarket also announced a new partnership with Yahoo Finance, which will integrate its probability data into a dedicated prediction markets hub, launching in the coming months. The predictions platform teamed up with fantasy sports app Prizepix to let users buy event based contracts combining prediction markets with fantasy gaming to reach new US states and attract more players. China alleges US seized $13 billion in Bitcoin linked to 2020 mining pool hack China's national computer Virus Emergency Response center is reportedly accusing the US government of taking possession of 127,000 bitcoin originally stolen from the Lubian mining pool in 2020. The stash, worth about $13 billion, was tied at the time to Chen Xi, chairman of Cambodia's Prince Group, who now faces US Charges for alleged crypto fraud. In a technical report summarized by the state owned Global Times, Cverc said the 2020 intrusion appeared to involve a, quote, state level hacking organization, end quote. The coins sat dormant for nearly four years before being transferred in mid-2024 to wallets later identified by Arkham as belonging to the US Government. CVERC argues the seizure may have been part of a longer operation involving the same attackers. The US Department of Justice disputes that account, maintaining the bitcoin was lawfully confiscated as criminal proceeds. Blockchain analysis firm Elliptic noted in a recent report that, quote, it remains unclear how the funds ultimately entered U.S. custody. Coinbase walks away from $2 billion bid for stablecoin firm BVNK Coinbase confirmed it is no longer pursuing its planned acquisition of bvnk, a UK based stablecoin infrastructure startup, ending what had been one of the sector's largest prospective deals. Quote after discussing a potential acquisition of bvnk, both parties mutually agreed to not move forward, A Coinbase spokesperson told Fortune talks had advanced into due diligence and an exclusivity period in October, according to reports. With the transaction valued at roughly $2 billion. Coinbase Ventures is already an investor in BVNK, which focuses on stablecoin payments and cross border settlement tools. The proposed deal would have significantly expanded Coinbase's stablecoin capabilities and followed other major moves in the space, including Stripe's $1.1 billion purchase of Bridge. BVNK did not respond to requests for comment. Mistrial halts case against Brothers accused of 25 million MEV exploit a federal judge has declared a mistrial in the case of Anton and James Pereira Bueno, two brothers charged with wire fraud and money laundering over an alleged $25 million exploit on Ethereum. Jurors said they were exhausted, divided and unable to reach a unanimous verdict. After three days of deliberation, prosecutors claimed the pair carried out, quote, the very first exploit of its kind by abusing their positions as Ethereum validators to access private transactions and reorder a block for profit. The defense countered that the action fell within Ethereum's own mechanics, likening it to, quote, stealing a base in baseball rather than committing fraud. The deadlock has fueled debate over whether maximal extractable value tactics should be criminalized. On Unchained's new show decks in the City, Crypto lawyer Jesse Brooks explained why this case was important and why she felt it's not wise to leave crypto's future in the hands of 12 inexperienced jurors. Unchained is produced by Laura Shin, with help from Matt Pilchard, Juan Aranovich, Margaret Curia and Pam Majumdar. The weekly recap was written by Juan Aranovic and edited by Stephen Ehrlich. Thanks for listening.

Sam Ragsdale (67:35)

It.