The Next Evolution of x402: ERC-20 Support

TL;DR: x402 has added support for any ERC-20 token. By using Uniswap’s Permit2 and Coinbase’s Gas Sponsorship Extensions, developers can now offer gasless, seamless payments for any asset, on any EVM chain.

Until now, the x402 protocol was built for a specific standard: EIP-3009. While this provided a great experience for assets like USDC and PYUSD, it created a closed system. Developers who wanted to accept other assets faced a difficult choice: offer a smooth user experience or support a diverse range of tokens.

We believe onchain payments should be token-agnostic. So x402 has now been expanded to support nearly any ERC-20 token. Whether it is a long-standing asset like USDT or a custom community token, x402 is becoming a universal payment rail that lets value move freely, regardless of the ticker symbol.

This also improved x402 for agentic payments. By letting agents transact in any asset without needing to swap or bridge tokens first, devs can save massive compute costs and time.

Breaking Down the Technical Pillars

Moving to universal support required a new approach to how the protocol handles permissions and gas.

From EIP-3009 to "Permit to Transfer"

The core of this evolution was a shift in how the standard handles approvals. By using the Uniswap Permit2 contract, x402 can now enable gasless transfers for generic tokens. Permit2 acts as a specialized layer that lets users sign off on transfers without needing to submit a manual approve() transaction every time they interact with a new app.

Overcoming "One-Time Gas" Friction

Standard Permit2 implementations still require a "one-time gas" payment; the initial on-chain transaction to give Permit2 permission to move a token. To fix this, the x402 protocol uses two new Gas Sponsorship Extensions:

• EIP-2612 Gas Sponsorship: This brings the security and ease of EIP-3009 to tokens that have built-in "permit" functions.

• ERC-20 Approval Gas Sponsorship: This is built for "base" ERC-20s (like USDT) that don't have advanced features.

In this flow, a facilitator sends a small amount of ETH to cover the gas. This puts the approval on-chain immediately so the user never has to buy or use a gas token.

The Coinbase Facilitator: Powering the Experience

While the x402 protocol sets the rules, the Coinbase Facilitator is the engine that runs them. We updated the Coinbase Developer Platform (CDP) facilitator to support these new Gas Sponsorship Extensions natively.

For developers using our infrastructure on Base and Polygon, the facilitator handles the sponsorship automatically. Your users can pay in USDT or DAI on day one, and the facilitator manages the gas mechanics in the background. The experience stays gasless and invisible to the end user.

Why This Matters: Unlocking New Use Cases for a Public Good

x402 is a champion for open-source financial infrastructure. All x402 contracts and extensions are audited and open for anyone to use. These are permissionless deploys. You can deploy these contracts to any EVM chain, and they will use the same address. This makes the protocol a neutral tool that doesn't favor one token over another - it simply provides the best rail for all of them.

This update also turns x402 into a massive expansion for onchain commerce and new use cases:

• Global Market Expansion: USDT is the leading stablecoin in many markets outside the US. x402 now makes USDT support seamless for international users.

• Custom Token Economies: Projects can move away from traditional "points" and use their own native tokens for app payments or loyalty rewards.

• Next-Gen Gaming Economies: Games can now use their native studio or in-game tokens as a primary currency. By using x402, players can transfer value or buy items without ever needing to hold a gas token like ETH, making the blockchain layer invisible to the player.

• Better AI Agents: AI agents can now transact in any asset without needing to swap or bridge tokens first, which saves compute costs and time.

• Chain-Specific Stability: Ecosystems are no longer tied to a specific stablecoin. They can use their own preferred stablecoins, like DAI, as their primary payment method.

The Road Ahead

We are moving quickly to bring this standard to the whole ecosystem. Next steps include:

• Upto Scheme: In the event that the exact cost might not be able to be determined ahead of time, authorize up to a certain amount.

• Multi-Chain Support: We recently added support for Stellar and Aptos to our SDKs, with many more chains currently under review.

• Live Now: The CDP facilitator already supports these extensions for ERC-20s on Base, Polygon and any other EVM. 

Next Steps

• For Merchants: Expand your asset lists. No need to limit your business to one stablecoin when users want to pay in DAI or USDT. Check out an example gas sponsorship setup here. 

• For Developers: Update your implementation to the latest x402 standards.

• For Facilitators: Use the new gas sponsorship extensions to give your users a better, gasless experience.