Since the emergence of ChatGPT and chatbots, the artificial intelligence (AI) hype has evolved into "agentic payments," billed as the next wave of internet commerce in which humans won't be transacting.

It will be AI agents paying each other: The idea is simple: build automated payment rails using AI agents that traditional firms like credit card companies struggle with.

And the narrative around agentic payments is only growing, with crypto CEOs like Brian Armstrong and CZ hyping AI agents and McKinsey saying AI agents could mediate $3 trillion to $5 trillion of global consumer commerce by 2030.

This is where x402, an agentic payments protocol supported by a consortium that includes Coinbase, comes into play. The idea is ambitious: embed payments via stablecoins directly into the internet’s communication layer so software can charge other software automatically.

Supporters of x402 believe that the protocol could enable a new class of internet businesses built around tiny automated payments. Traditional payment rails, such as credit card networks, were designed for human commerce, not thousands of sub-cent payments between software services.

"Existing payment processors will find it difficult to onboard these merchants. Not because the technology is lacking, but because when a processor says yes to a merchant, it takes on that merchant’s risk," said Noah Levine, a partner at a16z crypto.

Take the scenario Levine laid out as an example: an AI agent tasked by a human to complete research might call a specialized API tens of thousands of times. Each request might cost a fraction of a cent.

Over the course of a week, those calls might generate $40 in revenue for the developer running the service. Credit card firms struggle with these small payments and merchants, as they can't verify them.

"Processors reject applicants they cannot underwrite. A tool with no website, no entity, and no track record is extremely difficult to underwrite," Levine added.

On top of that, processing fees alone can exceed these micro payments, and payment processors usually require a middleman and an operating history before approving a merchant account.

X402 could solve this problem with agentic payments via stablecoins.

Even the name x402 itself hints at the project’s ambition. It references HTTP 402 — “Payment Required” — a status code reserved in the early days of the internet for a future where payments could be built directly into web requests. That vision never materialized in the traditional web, and the supporters of x402 think crypto rails could finally make it possible.

However, the problem is that the tech is still early and hasn't translated into onchain use quite yet.

'Mostly a mirage'

Onchain analysis from Artemis suggests that roughly half of observed x402 transactions reflect artificial activity, calling them "gamified" activities rather than genuine commerce.

"The x402 'agent payments' boom is still mostly a mirage," Artemis analyst wrote on X in February.

Recent daily snapshots show about 131,000 transactions generating roughly $28,000 in volume, with the average payment worth around $0.20.

The network has recorded sharper bursts of activity, including one day in February that logged 3.8 million transactions and roughly $2 million in volume. But onchain analysts at Artemis say much of that spike was due to infrastructure testing and experimental use.

Artemis categorizes these "gamed" transactions into two buckets: Self-dealing, where the same wallet acts as both buyer and seller, and wash trading, where the seller funds the buyer's wallet, which then sends the money back immediately after the transaction.

In other words, a lot of the traffic running through the protocol today does not yet resemble commerce.

However, in these early days of network testing, such types of transactions are to be expected. "As teams move from testing to production and start serving real users, these percentages should naturally decline," Artemis said.

"Open standards like x402 are designed to be permissionless and open, meaning no single entity governs every interaction - much like how no one 'controls' every computer using HTTP. Naturally, this means people will experiment with the system in sometimes unintended ways," Erik Reppel, Head of Engineering for Coinbase Developer Platform and Founder of x402 told CoinDesk.

A $7 billion ecosystem?

This gap between what's real and what's "gamed" transaction can make the ecosystem look underwhelming at first glance.

And looking at the total ecosystem's total market cap (aggregate value of all tokens and projects built within a network and not to be confused with the total market cap of the network’s token, as the token for x402 doesn't exist), which currently is around $7 billion, seems out of sync with about $28,000 in daily payment volume.

Given the gap, some might even be ready to dismiss the thesis as wishful thinking, sort of like crypto gaming of the past with massive valuations and few users.

But CoinGecko's category shouldn't be taken at face value as it includes Chainlink's LINK token, which has a market cap of $6.3 billion. LINK isn't a pure-play x402 asset.

While Chainlink supports the protocol through integrations such as its Chainlink Runtime Environment, LINK predates x402 and plays a far broader role across other crypto infrastructure. Its inclusion in the category artificially inflates it, setting expectations too high for such a new protocol.

Still early?

While adjusting for the large contribution from LINK token's market cap, the ecosystem may look closer to the reality of the transactions, the core challenge remains: the merchants that x402 is designed to serve are still rare.

The x402 protocol isn’t trying to replace cards or traditional payment systems. Instead, it’s targeting a new category of digital commerce — small automated services used by AI agents and software systems.

As AI tools make it easier to build and launch software, a growing number of developers are creating small, single-purpose services — data feeds, image processors, code-testing tools — designed to be consumed not by humans but by other software.

And that takes time.

"At its core, it’s a micropayments rail," said an Artemis analyst. "Its true utility emerges at small transaction sizes, powering things like pay-per-use APIs, content generation, and agent coordination.

For now, however, those merchants remain rare at this stage of this new agentic commerce.

Earlier attempts at similar ideas in crypto have struggled to gain traction. Micropayment systems tied to the Lightning Network, browser monetization models like BAT$0.09734 ecosystem, and various decentralized compute marketplaces all promised new internet economies but often failed to attract sustained real-world usage.

The narrative around agentic commerce is growing faster than the usage that would justify it. The gap between the protocol’s ecosystem size and roughly $28,000 in daily payment volume shows that the infrastructure for agentic payments is arriving first, but the economy it’s meant to support may take longer to develop.

However, the vision behind x402 — an internet where AI agents seamlessly pay each other through stablecoins — remains compelling. "We'll probably overestimate how fast agentic commerce takes off in the next year, but we're largely underestimating what it can become in five," said the Artemis analyst.

"When agentic commerce arrives, you'll either have adopted the standard or you'll be left behind."