x402
Payment Protocol
Mason Hall
November 3, 2025
Every LLM interface and chat UI now uses tools. We have the first party integrations, like Canva in ChatGPT, and we have long tail tools through MCP, although the user and developer experience isn't quite there. A few curated demos appear magical, but it still feels like we are a discrete step away from true agentic magic.
Our thesis is that the best agents will surprise and delight us. They will emerge, instead of being hand-wired from scratch. Emergence needs the long tail. Closed curation scales linearly; emergence scales combinatorially.
Agents and the resources they use all need to speak the same money-language. A quickly-maturing web standard, called x402, is a way to attach a stablecoin payment to any web request, and it might be the solution.
Some definitions
The problems
Today, composition is bottled up. Context scales O(N) as we stuff tool specs into prompts. API keys and billing are human-gated, opinionated, and brittle. Platform owners respond by curating a few tools, internalizing others, and eventually will try to unify billing. That improves the UX, but caps surface area and keeps composition centralized.
Clearly teams like OpenAI view their integration opportunities as having power-law dynamics. Integrate the most popular tools, and don't waste time on the long tail. MCP has come a long way to help enable access, but discovery and value transfer are fundamentally out of scope.
What changes with access to the long tail
We remove the burden of creating the right abstractions from the developer. For great agents to emerge, they need a primordial soup of addressable, payable building blocks: thousands today, millions next, and eventually billions.
Traditionally, this approach has been doomed to fail. Why waste engineering resources and LLM tokens on surfacing things no one uses? Why would I build it, assuming developers will come and innovate for me? Why not innovate myself and own the experience?
Those questions are valid, and correct, in the former paradigm where developers write the glue that composes these resources. But for the first time ever, we don't need to do that any more. We have intelligence at our fingertips that can do it for us.
What's needed
Fostering a truly emergent ecosystem of intelligence is not without its own challenges. We need help. First and foremost, we need more APIs supporting x402. We need discovery, reputation systems, and an incredible developer and agent experience. Already, the industry has started to rally and lay out this groundwork. Coinbase, Cloudflare, Vercel, Visa, Stripe, and others are thinking through these challenges with us.
Everything we are building at Merit Systems is built to foster emergence:
- The Terminal turns open-source TODOs into funded work so the building blocks exist.
- Echo is a model router with user-pays metering that keeps composition fast and cheap.
- x402 (with x402scan) is a standard to address, authorize, and pay for any web resource, plus the index that makes it findable and trustworthy.
By breaking down the barriers to creation (The Terminal), value (Echo), and access (x402), we are pushing towards a new era of emergence.
There's a whole ecosystem around x402 already. It's all being built in the open. There's never been a more impactful opportunity to create the payment rails for the next billion intelligences.
We don't have the all the ingredients just yet, but the proof is in the primordial pudding.