Using a beginner's analogy to explain the current x402 wave trend

Author: BroLeon, the Australian Lion Brother; Source: X, @BroLeonAus

Suddenly, in the group, Little Lion Sister was asking: “What exactly is x402?”

I suddenly realized:

Although many hardcore analysis articles have been written in the market, for most retail investors, they still don’t quite understand what this suddenly popular thing is. Why does it involve the love and hate of CEXs? Ping, Payai, KiteAi—what do these projects have to do with each other? What are 8004, ACP, and others? So confusing.

I tried to use an analogy from everyday life to explain to beginners, making it easier to understand the situation.

First:

Imagine AI Agents as cars;

Imagine the AI Agent launch platform as a car factory;

Imagine each blockchain as a territory;

Imagine each CEX as a country;

Imagine 402 as the newly launched ETC card system on the market.

Current situation:

There are many car factories (launch platforms) distributed across various countries (chains), such as the well-known old car manufacturer—@virtuals_io in Base country.

Suddenly, one day, Country C invented a new device—adding an ETC card to cars, so they can pass through highway tolls without stopping. After this invention (x402) was announced, it was widely reported in the news, but soon it faded into obscurity (the news about Coinbase and Google collaborating on the AP2 protocol and x402 standard).

A month later, a propaganda minister ($Ping ), a great speaker) came to power in Country C. He mobilized major TV stations and media worldwide to focus intensely on this ETC technology, attracting crowds. Suddenly, countries around the world saw how much economic value this ETC could generate.

Neighboring Country O saw the opportunity, contacted Country C immediately, and decided to promote this ETC in their own country, verbally promising that all future cars they produce would be equipped with Country C’s ETC card, further boosting market enthusiasm for ETC cards.

Under the influence of various channels, the market’s crowd began investing in ETC-related stocks, so not only did the minister’s own stocks rise, but also the stocks of car manufacturers capable of pre-installing ETC cards in bulk ($Virtual )) surged. Stock exchanges in various countries also launched ETC-related concept stock sectors (each wallet now has an x402 sector).

However, the powerful Country B did not immediately follow suit with an exact copy of this ETC system. The reason is that the creators of standards are always at the top of the food chain. Should they really just follow? China has paid a lot of lessons early on.

Is the ETC standard really that difficult? Is it only compatible with Country C’s ETC? Not necessarily. Currently, the real choice facing Country B’s government is whether to develop their own bETC for their cars or to directly adopt Country C’s ETC.

The benefit is that with a global standard, cars can be driven anywhere in the world without stopping at toll booths. The downside is that they follow other countries’ standards, and their own investors can only buy foreign stocks to take over. – This is one of the key reasons I emphasized the importance of closely monitoring Country B’s policies earlier.

So, what are the projects I mentioned earlier—$Payai, @GoKiteAI, @Unibase_AI, @virtuals_io—doing?

I’ll still use the car analogy:

Right now, each country has some cars running on their highways, but the standards are not unified. Different manufacturers produce different cars. Some have 3 wheels, some 5; some doors on the roof, some in the front; there are luxury sports cars and old-timers.

It would be great if someone could unify the car standards, saving a lot of production costs globally, and making it easier for users to choose cars.

To solve this pain point, the veteran car manufacturer @virtuals_io early on unified their car standards with ACP. Now, 90% of their cars follow this standard. Adding ETC is just a matter of course.

Country B’s car manufacturer @Unibase_AI also plans to do the same. Their car standard is erc8004—full name Trustless Agents, and they claim to soon release Country B’s first popular car with ETC installed, which has caused their stock to surge recently.

So, what about PayAI?

PayAI is an ETC patch compatible with cars from multiple countries. After installing their patch, cars from different countries can use ETC. Although it’s a product from Country S, its compatibility is quite strong.

Its core team are the developers of Country C’s ETC technology (x402 protocol), which gives it an advantage. As the market gradually understands the ins and outs of ETC technology, investors are voting with their feet, and stock prices are soaring.

And finally, @GoKiteAI.

This project is impressive. They aim to build a separate global highway network, standardizing all cars on this highway, with all vehicles inherently equipped with ETC.

Because it’s not built halfway but completely rebuilt, cars on this network will be capable of autonomous driving and vehicle-to-vehicle communication, which is much easier to implement than standardizing existing cars from different countries.

Of course, the cost will be higher, the difficulty greater, and the price more expensive, but the market is very optimistic about it (including me).

As a heavy user of AI, I have no doubt that the future world—from Web2 to Web3—will be full of AI agents, and the competition for important standards will naturally be part of industry development.

Seeing the agents trading competition on Nofi.ai, I feel that the Web3 world being further infiltrated by AI agents is not far off. The 402 standard is indeed an important step in helping them break the dimensional wall. I hope to seize high-quality targets in this wave.

The analogy above may not be very precise; it’s just for better education of the market. Please kindly experts lightly critique and suggest better, more accurate metaphors and expressions.