Coinbase has upgraded its x402 protocol to implement usage-based pricing for agentic AI compute requests, replacing the previous fixed fee structure. This "Upto" scheme allows for variable costs in services such as large language model inference and data queries.
Previously, x402 only supported exact, fixed-price payments, limiting its use for services where costs depend on factors like token count or compute time. The new EVM implementation supports all ERC20s and offers gasless payments.
The "Upto" system enables sellers to set maximum prices, while buyers authorize payments up to that limit. Servers charge only for actual task completion, preventing overcharging and potentially reducing costs for users.
This addresses the issue where simple and complex AI requests incurred the same cost, leading to over or underpayment. The upgrade allows users to set pre-task price limits.
The x402 protocol, developed by Coinbase and now managed by the nonprofit Linux Foundation with backing from tech giants like Google and Microsoft, has seen a significant decline in transaction volume since its peak in November.