The x402 payment standard, designed for AI agents to conduct transactions using stablecoins like USDC, currently lacks a mechanism for refunds or dispute resolution. Albert Castellana, co-founder of GenLayer Labs, warns that this absence of a chargeback process poses a significant barrier to scaling the technology for high-value commercial transactions.
Launched in May 2025, the x402 protocol has experienced rapid adoption for micropayments. By July 2026, the network processed approximately 75 million transactions in a single month, with cumulative volume exceeding 130 million transactions. Major industry players, including Coinbase and large card networks, are involved in the governance of the standard.
GenLayer Labs has proposed a decentralized adjudication system called Internet Court, which utilizes AI to resolve payment disputes. The company estimates that fees for these verdicts start at approximately 30 cents per case, aiming to make dispute resolution economically viable for smaller transactions that traditional legal processes cannot cover.
The company has migrated its public network to Arbitrum and, as of late October 2026, is collaborating with ZKsync on enterprise-grade features. Castellana suggests that implementing an external adjudication layer could allow the industry to maintain the speed of stablecoin settlements while providing necessary consumer protections.
