Interpreting the hot x402 protocol: How to unlock a new economy of ad-free and gas-free smart entities?

Author: aryan

Compiled by: White55, Mars Finance

For decades, online advertising has been the only way for the internet to survive.

Everyone is vying for attention. To this end, businesses will collect all possible data around you, create user profiles, and show you advertisements.

Proxy Networks and Original Sin [1]

On the internet, this single model has unlocked a market currently worth trillions of dollars.

Finance always exists on the internet:

Establish partnerships with payment service providers

Set up a paywall for the website

or place advertisements

However, small payments (under $1) have always been economically unfeasible in the past (with VISA/MasterCard charging about 2% + $0.1 per transaction), which has made advertising the only viable business model, leading to:

Users can access a vast amount of content for free.

Advertisers can accurately reach target users.

Content providers earn revenue from their content.

Create a win-win-win situation.

As the world moves towards intelligent agents:

Intelligent agents are replacing humans as the main consumers of content by acting as middleware.

Advertisers will be unable to accurately reach human users, and the advertising economic system may collapse.

Intelligent agents now either steal (scrape) content or purchase content.

The Application Programming Interface (API) will replace browsers and proxy browsers [2], becoming the default communication mode.

User Interaction Path

Content theft is not a viable path for the internet, so content publishers will turn to charging small fees on their websites, and agents need to have payment capabilities. For decades, micropayments have been difficult to achieve until blockchain technology emerged to break this deadlock.

Blockchain technologies such as Solana make scalable micropayments possible without imposing predatory fees on users.

The unified interface created by the x402 protocol can achieve the following functions:

Consumers pay for content

Content publishers profit from content.

No intermediaries (VISA/MasterCard) involved

Implementing micropayments for agents

Source: payai.network

When any client (agent, browser) sends a content access request, the content host will return a payment requirement. After the client completes the payment, it can access the content, which opens up a new economic model for the intelligent internet.

The application direction that I am particularly optimistic about:

No GAS fee user experience: I believe one point that has not yet been fully explored is how x402 enables users to conduct transactions without GAS fees on any network; users only need to hold assets in their wallets to complete payments.

x402 Browser: There should be someone who directly develops based on the Chromium codebase to deeply integrate the x402 protocol into the browser kernel. In fact, Brave Browser is the most suitable for promoting this plan, as they have significant influence in the cryptocurrency space, have built-in wallet functionality, and default support for the IPFS protocol. In my opinion, they are currently the technical team closest to having the capability to implement this.

On-chain Bazaar: Just as traditional markets face discoverability issues, Coinbase has addressed this pain point by launching “Bazaars” (meaning “market” in Hindi). However, the current offline-maintained bazaars still have certain access restrictions, and there is an urgent need to establish an on-chain directory system that allows anyone to add sellable resources (API interfaces/newsletters/e-books, etc.) and incorporates a rating mechanism similar to how OpenRouter scores AI models.

Ad Skipping: Like any new technology, the global adoption of x402 will take time. In the meantime, skipping ads through micro-payments will become the natural evolution of the protocol. After users set an acceptable daily spending limit, the system will automatically skip ads when using the x402 browser to access YouTube and pay the corresponding fees to advertisers on behalf of the users.

I am always amazed at how a simple technology can unlock new economic models, and x402 is one of them.