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[HOST] Welcome to X1 Report, your source for the latest in blockchain technology. Today, we're

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diving into a new development from X1 Labs, as detailed in two litepapers recently posted

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to their Builders Telegram group.

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[ANALYST] These papers, titled W2 × x402 and W2 × Intents, outline plans for the W2 smart wallet and

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its integration with the x402 payment standard. Let's start with what x402 is.

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[HOST] x402 is an open standard for payments over HTTP, governed by the x402 Foundation under the

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Linux Foundation since April 2026. It uses the old HTTP status code 402, 'Payment

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Required', to facilitate transactions.

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[ANALYST] The standard has seen roughly $19 million in adjusted volume across about 134 million

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transactions since May 2025, with key players like Coinbase and Visa involved. However,

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it's currently infrastructure-heavy on the payer side.

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[HOST] Now, let's look at the gap W2 aims to fill. Today, x402 assumes a payer is a raw private

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key that signs token transfers. This leads to several issues, including custody, gas fees,

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and smart wallet support.

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[ANALYST] W2 addresses these gaps by splitting the wallet into four components: WalletV2, passkey

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authority, canonical intent, session authority, and site permission. Each plays a crucial

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role in facilitating payments.

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[HOST] WalletV2 is the program-derived account that holds assets, while passkey authority

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verifies WebAuthn credentials on-chain. Canonical intent binds network, program, wallet,

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nonce, expiry, recipient, amount, and fees.

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[ANALYST] SessionAuthorityV2 allows agents to spend within a budget, with limits that can't be

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exceeded even if the agent host or paymaster is compromised. A child wallet ensures

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budgets never exceed what the child holds.

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[HOST] The paper also introduces a facilitator for X1, which would settle payments on the X1

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network and other SVM chains where no third-party facilitator currently runs.

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[ANALYST] Gas fees are paid in USDC, with a paymaster handling the transaction. The paper suggests

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users can pay gas in the token being moved, reducing friction and costs. This pattern is

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credited to Octane and Kora.

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[HOST] W2 adds four key features to x402: a smart-wallet profile, payments tied to one request,

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agent budgets, and a facilitator for X1. These innovations aim to make payments more

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secure and efficient.

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[ANALYST] Use cases include agent API budgets, paid oracle updates, pay-per-article content, receive

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and resend USDC, paid MCP tools, recurring merchant charges, bridge-funded cold starts,

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and acquire-then-pay scenarios.

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[HOST] The security model ensures no single layer can move value, with multiple checks in place.

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However, the paper leaves several questions open, including the nature of session limits,

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facilitator support, liquidity, and onboarding costs.

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[ANALYST] X1 Labs plans to implement these features through a ten-step roadmap, starting with

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writing test vectors and running a W2 facilitator on X1. The final step is taking the

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smart-wallet profile to the x402 Foundation.

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[HOST] For more details on how solvers could let you pay in any asset on X1, be sure to check out

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our companion piece on W2 × Intents. Stay tuned for updates and insights from the

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blockchain community.

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[ANALYST] That's all for today's report. Join us next time for more cutting-edge blockchain news.