AI Agent Mode Overview

Why AI Agents Need Autonomous Payments

In previous lessons, you experienced the human payment flow: click a button, sign a transaction, receive content. This works well for humans but creates friction for AI agents that need to:

• Make hundreds or thousands of small payments automatically
• Operate without human intervention for each transaction
• Access paid services programmatically

Traditional payment systems require human-centric verification (CAPTCHA, KYC, manual approvals) that AI agents cannot complete. x402 solves this by enabling signature-based payments that can be automated.

Two AI Agent Modes

The x402 starter kit demonstrates two approaches to AI-powered payments:

1. Token-Based AI Chat

A pay-per-use chatbot where you pay based on actual token consumption:

• Pricing: $0.001 per 1,000 tokens (with a $0.50 max cap per message)
• Scheme: "upto" - authorize a maximum, pay only what you use
• Use case: Variable-cost AI interactions where usage differs per request

2. Autonomous AI Agent

A fully autonomous agent that manages its own wallet and budget:

• Pricing: Fixed $0.02 per service call (cryptocurrency price lookups)
• Scheme: "exact" - pay the specified amount per request
• Use case: Automated services that need to operate independently

Key Concepts

Agent Wallets

Unlike human payment mode where your main wallet signs each transaction, the autonomous agent uses a dedicated agent wallet:

1. Separate from your main wallet: Your funds stay secure
2. Encrypted in browser: Private key is encrypted using your wallet address
3. Pre-funded with budget: You transfer USDC to set spending limits
4. Signs autonomously: No popups or confirmations per transaction

Budget Authorization

Instead of approving each payment, you authorize a budget upfront:

1. Create an agent wallet (one-time setup)
2. Fund it with USDC (e.g., $0.75 default budget)
3. The agent spends from this budget automatically
4. Withdraw remaining funds when done

Gasless Payments

Both AI agent modes use the same gasless payment mechanism as human payments:

• Users sign EIP-712 authorizations (not transactions)
• The facilitator submits on-chain transactions
• No AVAX needed in the agent wallet - only USDC

Switching to AI Agent Mode

In the starter kit interface:

1. Look for the mode tabs at the top of the page
2. Click "AI Agent" to switch from Human Payment mode
3. You'll see two sub-modes: Token-Chat and Autonomous-Agents

The following lessons will walk you through each mode in detail.