The Breakdown - Agentic Payments and the Next Internet Economy

Episode Date: September 26, 2025

Coinbase and Cloudflare are pushing forward with X402, a new crypto-powered payments protocol for AI agents. Could agent-to-agent transactions reshape e-commerce and the web itself? Meanwhile, Tom Lee is pitching Ethereum as Wall Street’s neutral chain of choice—even as critics push back—and Michael Saylor doubles down on Bitcoin as the true foundation of digital capital markets. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Thursday, September 25th, and today we are talking about agentic payments and whether Ethereum is the future of finance. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, like I said, today we are kicking off with another update in the world

of agenic payments. Coinbase and Cloudflare have teamed up on a new payments protocol for AI called X402. It's designed to allow AI agents to transact with each other directly, enabling machine-to-machine commerce. Now, last week, we covered another AI payments protocol designed by Google in partnership with Coinbase and a consortium of other supporters called AP2. AP2 was designed to solve the problems inherent with AI-enabled e-commerce, in other words, situations where a user has instructed an AI agent to make a purchase on their behalf.

Now, this is certainly interesting in its own right, and it does work to solve what is going to be a huge set of problems around introducing agents into the current e-commerce flows, but it also falls way short of the classic crypto-industry vision of autonomous AI agents paying each other without a human involved in any way. X402 is a component of AP2 enabling agents to pay using crypto. Wednesday's news was that Cloudflare has taken X402 and integrated it into OpenAI's agent software development kit and the Model Context Protocol or MCP. MCP you can think of kind of like an API for agents.

It's a protocol that allows agents to interact with various data sources. In this case, MCP integration will act as a common interface so agents can use blockchain payments networks. Coinbase framed X402 as generally unlocking agent-to-agent, agent-to-business, and agent-to-user payments. Cloudflare gave the example that X402 can be used to allow agents to make purchases across multiple vendors, complete micropayments for individual website visits, or power autonomous stock traders. One of the immediate use cases that Cloudflare is looking to bring to market is the idea of pay-per-access web crawlers. There has been growing controversy in the world of AI and internet

content around whether AI models should get free access to the open internet. In the past, web pages have given Google's crawlers free access to their data for the purpose of linking to them in Google Search. With the rise of AI searches, however, webpages are seeing fewer clicks, and there is a sentiment among some that AI companies are free-riding the open web. Cloudflare's proposed solution is to gate content behind a paywall for AI web crawlers. Over the summer, they proposed this system and a marketplace to arrange transactions, but many of the details about how payments would actually work were left blank. X402 plugs those gaps, allowing an agent acting on behalf of the web crawler to arrange payment with an agent acting for a web page.

This would happen all seamlessly and automatically without the need for human input. Coinbase CEO Brian Armstrong commented that to him this is about enabling the natural next step of AI. He tweeted, I've been thinking about how internet payments should work for years, or more specifically how they aren't working and need to improve. X402 is a big step forward. AI agents can now transact value, not just exchange info. Cloudflare and Coinbase are now going to use X402 to conduct the first trial run

of what an AI native agent-to-agent economy powered by stable coins could look. look like. Next up, we move out of the realm of technology onto the realm of Wall Street, where Tom Lee has declared that Ethereum is the blockchain that Wall Street needs. Appearing at Korea Blockchain Week on Wednesday, Lee said, I don't think anyone ever feels that someone's got a fat finger tilting Ethereum in their favor. If you think about how Wall Street operates, they will only want to operate on a neutral chain. Now, Lee is, of course, talking his book. His Ethereum Treasury Company Bitmine bought another $1.1 billion worth of Eath earlier this week,

bringing their total to over 10 billion or around 2% of total supply. That said, the stock is down 13% so far this week. Continuing with his bullish sales pitch, Lee added, So when I look at that, combined with agentic AI and robots that are really going to create the need for a token economy for robots, a lot of that will happen on Ethereum. In fact, President Trump today just talked about how he needs proof of human to protect us, and a lot of that work is going to be done on Ethereum. Now, Lee is still bullish Bitcoin as well, declaring a price target between 200,000 and 250,000 for the end of the year. However, he believes that Ethereum will outperform and recover its average Bitcoin price ratio, implying a roughly $10,000 price.

Now, Tom Lee is a Hall of Fame bullposter. So in that sense, there's absolutely nothing newsworthy about the comments. The interesting part is that Lee has never had the prominence he enjoys at this moment. He's doing the kind of marketing that the Ethereum Foundation never could, explaining the network to TradFi investors. Still, the message does seem to be falling a little flat in markets and causing a ton of controversy on Twitter. There was an entire news cycle in Ethereum land debating whether Lee would be able to influence governance decisions if Bitmine reaches his target of a 5% stake. David Hoffman of Bankless

argued that ETH governance is a little more chaotic than that, commenting, saying people who hold large amounts of ETH obviously have sway is a poor representation of the decade of data we have now about how Ethereum's direction has been decided. More generally, we're starting to reach the point in crypto adoption, where the infrastructure choices really matter. Lee is promoting Ethereum is the obvious choice for tokenizing Wall Street, but Solana is putting up a huge fight on that front. The battle for narrative isn't just important for price action. It also could determine the victor in a winner-take-all competition. In that context, Andrew Kang of Mechanism Capital went viral on Wednesday with a blog post titled Tom Lee's ETH thesis is R-worded. Kang pointed out that

value accrual to the ETH token is far from certain, even if tokenization takes off on the network. He added that adoption seems a little lacking, commenting, have large banks and other financial institutions bought ETH on their balance sheet yet? No. Have any of them announced plans to? Also no. addressing Lee's claim that ETH should have the same market cap as all financial infrastructure companies, can call that thesis a, quote, fundamental misunderstanding of value accrual and just pure delusion. Concluding, he said, Ethereum's valuation comes primarily from financial illiteracy, which, to be fair, can create a decently large market cap. Look at XRP. But the valuation that can be derived from financial illiteracy is not infinite. Broader macro liquidity has kept

ETH market cap afloat, but unless there is major organizational change, it is likely destined to indefinite underperformance. Now, you would be right to assume that the entirety of ETH Twitter hated this take, but it also raised some important points about how crypto stories are told. TXMC commented, He just wants people to give him money. When you accept this, his thesis doesn't need to make sense just to sound good. Sailor is not that different in this regard.

He just says other things. Web3 developer Arjun Kelsey wrote, The thing is, Tom Lee has to explain Web3 goals to people who have no conception of decentralization, similar to how I explained Santa Claus to my kid. The explanation makes no sense, but boy, does it. make my kid feel great. Rom and Panda commented, Tom Lee is a marketing guy. He's a salesman. Of course you have to be ridiculously stupid to sell. At the end of the day, has he brought money in? That's the ultimate test for selling. Look, in many ways, Lee is just following in the footsteps

of every crypto promoter that came before him. He's telling the story of how Heath could overtake the New York Stock Exchange and the DTCC as the fundamental financial infrastructure. There are, as you might well imagine, a range of opinions on whether that story is correct, likely or even plausible, but primarily what Lee is doing is telling a story to a group of tradfai traders who have not heard it before. For people who have traded ETH for multiple cycles, it's easy to dismiss the story as unlikely to ever play out. And yet, we are now in a fundamentally new paradigm where Tradfai adoption is more likely than ever. Ultimately, Lee's results are shown in the charts, and for the moment, it looks like he is losing his impact a little bit.

CoinMamba commented that maybe it's time for a change in strategy, tweeting, Tom Lee should stop making predictions and instead start bidding. Look, even Vitalik is pushing the idea that financial use cases are the killer app for Ethereum. In previous cycles, Vitalik bemoaned the rise of Defi and argued that Ethereum should fulfill its role as the world computer. In a blog post this week, he's changed his tune completely. Vitalik discussed Google's highly profitable ad business that sustains less profitable but interesting and valuable product lines.

He wrote, low-risk defy can play a similar role for Ethereum. Other applications, including non-financial and more experimental applications, are crucially important for Ethereum's role in the world and for its culture, but they do not need to be looked at as revenue generators. The reason the discussion is important is that Ethereum has kind of always had some identity crisis. Some leaders, like Vitalik, did not like the speculative activity that drove value to the token, suggesting that blockchain should be used for something more societally valuable than flipping NFTs. We had the whole ultrasound money meme that happened for a while there. More broadly, even outside of Ethereum, there is now a big culture shock going on in the heart

of the crypto community as relates to these financial use cases. Leaders in Solana have always marketed it as a way to a decentralized NASDAQ at all, and now some factions in the Ethereum community have jumped on board and accepted that financial use cases are critically important. This is all, of course, happening in the context of discussions across Washington and Wall Street about what the next iteration of U.S. capital markets should look like. In a very real sense, then, the narrative stories and performance of today's crypto markets could determine the infrastructure for tomorrow's financial system. I think the positive thing is that the

Ethereum community seems to have finally decided to stake their claim as the future of finance, whether or not anyone buys that story. Lastly today, we haven't had as much good bull posting lately. Enter Michael Saylor. Sailor is looking for another big move in Bitcoin in Q4. Speaking with CNBC, he said, I think that as we work through the resistance of late and some macro headwinds, we'll actually see Bitcoin start to move up smartly again towards the end of the year. He continued, companies that are capitalizing on Bitcoin are buying even more than the natural supply being created by the miners, which is putting upward pressure on the price. Even with the ETFs and Treasury companies buying Bitcoin, we haven't seen the supply squeeze

that many belief played a role in the 2020 Bull run. Miners currently generate around 900 Bitcoin per day, while on average the ETFs have been buying 1,430 Bitcoin per day this year. Despite that excessive demand, there has been willing supply for a lot of this. One of the big themes we've seen this year is a lot of ancient Bitcoin whales liquidated their coins into that excessive demand produced by the ETFs and Bitcoin companies. Saler concluded the interview by reiterating his major thesis for Bitcoin capital markets, saying, the world ran on gold-backed credit for 300 years, the world's going to run on digital gold-backed credit for the next 300 years. So treasury companies are holding digital capital and creating digital credit instruments.

And there's, of course, a huge demand for equity and credit instruments and traditional capital markets. Bitcoin is emerging as the ideal form for digital capital to back those instruments. So there you have it, friends. Tom Lee is saying Ethereum is the future of finance. Brian Armstrong is just off designing agent payments, and Saylor is saying, hell no, it's still all about Bitcoin as it always has been. Whatever you believe, that is going to do it for today's breakdown. Appreciate you listening as always, and until next time, be safe and take care of each other. Peace.