Why Didn't the x402 Protocol Pull a DeFi Summer?

It has been almost a week since the x402 Protocol ignited the market enthusiasm due to the meme coin $PING. So far, the vast majority of market sentiments have been positive, with optimistic outlooks on the future development of the x402 Protocol and discussions on various projects. However, some voices also suggest that x402's rapid rise may be too fast, potentially unable to sustain the overheated market expectations in the short term, leading to a lack of follow-through.

So, what changes have occurred in the x402 Protocol ecosystem in this nearly one-week period? After reviewing and analyzing the changes in the x402 ecosystem over the past week, we can provide an answer to the content of the article title.

Market Enthusiasm Unabated, Continuously Hot

Regardless of how the market views $PING's rapid surge, $PING has indeed raised awareness of the x402 Protocol among industry players. Before the surge of $PING, the 30-day data of the x402 ecosystem showed that the minting interface of $PING had received over 150,000 x402 transactions, amounting to approximately $140,000, leading by a landslide against the second-ranked Questflow, which had only about 24,800 transactions totaling less than $1,400.

However, in just 24 hours, the data has far exceeded the previous 30-day data. In the past 24 hours, the top 10 most interacted services have received around 280,000 transactions, which is twice the 30-day data. At the same time, the amount totals approximately $246,000, also doubling the 30-day data.

It can be said that to date, the x402 Protocol is by no means a flash in the pan and continues to be well-received by the market.

Hype Shifts from Meme to Application

As the first meme coin born out of the x402 Protocol, $PING was once compared by many players to the first token of the BRC-20 Protocol, $ORDI, during the most FOMO stage. However, after $PING briefly surpassed an $80 million market cap, it was unable to continue its rapid ascent and has now retraced to a market cap of around $29 million.

The driving force behind meme coins relies on market sentiment. However, following the tweet from OKX CEO Star with a screenshot of $PING, which lacked further tweets in the short term that could drive market sentiment, a pullback in $PING was also to be expected.

One major difference from Emblem Assets Protocols like BRC-20 is that the x402 Protocol itself is a protocol that focuses on payment + AI Agent. Therefore, instead of withdrawing their enthusiasm and funds from the x402 Protocol, players shifted them to x402 Protocol ecosystem-related application targets.

$PAYAI took advantage of this opportunity and became the new leader of the x402 Protocol. Yesterday, $PAYAI's market capitalization briefly exceeded $76 million, marking an increase of approximately 12 times since October 24. Currently, the coin has experienced a pullback, with a market cap of around $53 million.

This is mainly due to two factors, with the primary reason being that Payai is currently the second-largest Facilitator in the ecosystem after Coinbase official, providing on-chain validation and settlement services for the x402 Protocol:

Currently, PayAI has processed over 14% of x402 transactions, making it the largest Facilitator after Coinbase in terms of transaction processing volume.

Additionally, Payai's founder Notorious is the 7th ranked contributor on the x402 Protocol's official Github, which players interpret as a "close connection between the project and the x402 Protocol."

Ecosystem-related tokens such as $dreams and $SANTA have also seen significant price surges. If you want to dive deeper into these ecosystem-related projects, you can refer to last week's article on BlockBeats, "Like the 30x Big Golden Dog of Emblem, What Is the x402 Protocol?."

Even some projects that just mentioned plans to work on x402-related projects have seen instant skyrocketing in the past few days, such as Karum, Praxis, and others. Currently, these projects have experienced significant retracements after the short-term emotional hype, highlighting the need to be cautious of the risks brought about by FOMO.

Various Chains' Layout in the x402 Track

The popularity of the x402 protocol has not only attracted players but also drew attention from multiple chains. As an open protocol designed to inherently support multiple chains, Coinbase's in-house Base Chain, as the "home turf," goes without saying, while the development of x402 on Solana and BNB is also worth our attention.

Yesterday, Solana's founder, toly, tweeted, "x402 is cool."

This tweet led to the $x402 meme coin on Trend.fun briefly surpassing a $4 million market cap. Trends.fun founder mable then posted on the X social platform proposing to hold an "x402 Solala Hackathon" event to find excellent AI payment projects. This received support from Solana's Global Developer Ecosystem Lead, Jacob Creech.

Tokens such as $PAYAI and $dreams with outstanding market performance are all on Solana, giving Solana a certain advantage at the moment.

The BNB Chain official tweet also promoted four x402 protocol-related projects on the BNB Chain yesterday, namely Unibase, pieverse, AEON.xyz, and TermiX AI.

OKX Web3 Wallet Mobile Lead Felix Fan tweeted yesterday that he received support from x402 protocol core contributor Bob Xu and they will jointly explore achieving permissionless transactions between AI Agents on the X Layer:

Compared to the early days of Bitcoin's ecosystem when it was ignored, the x402 protocol has received attention from multiple chains this time, and we believe its development will be even faster.

Conclusion

After analyzing the changes in the x402 ecosystem over the past week, we can now answer the question posed in the article's title.

Firstly, the primary reason for x402's continued hype, in the editor's opinion, is Coinbase's backing. The protocol's long-term development initially needs to overcome the major hurdle of merchant "onboarding" before focusing on user "adoption." As this is Coinbase's in-house protocol, coupled with the foundation established in partnership with CloudFare, it theoretically has sufficient resources to drive widespread adoption.

This is also why, despite the existence of similar competitors such as bitGPT's h402 and Radius's EVMAuth, the x402 protocol has not seen a slew of x402-XXX new protocols being minted and new assets being issued, as was the case with BRC-20 protocols during their heyday—Coinbase's brand itself serves as a hype driver for players.

Secondly, compared to the early days of BRC-20 when there was a single narrative of issuing new meme coins with no other narrative to follow, meme coins in x402 are simply the "icing on the cake." Players not only have meme coins to choose from but also several application targets already available, and these targets align with the protocol's narrative. Despite criticisms of the immaturity of these applications, this is not crucial for players. Having space for funds to move within the narrative prevents a sudden influx or rush to withdraw.

It has been quite some time since an ecosystem like x402 has seen such a fresh narrative that evokes high enthusiasm from both the crypto community, project teams, and the ecosystem as a whole. Not only have meme coins been in the limelight, but application coins have also reentered players' attention, marking a positive start.

However optimistic one may be about the future of the x402 ecosystem, everyone should still be mindful of the investment risks during times of overheated emotions.