Stablecoin

A stablecoin is a digital asset engineered to hold a steady value, most commonly pegged 1:1 to the US dollar. Unlike Bitcoin or Ethereum, whose prices float freely, a stablecoin is designed so that one token is always redeemable for — and trades at — one dollar.

The point is to combine two properties that normally live in different systems: the programmability and instant settlement of a blockchain, and the price stability of fiat currency. A stablecoin payment moves like crypto but denominates like dollars.

Fiat-backed stablecoins — the kind used in agent payments — hold reserves of cash and short-term US treasuries equal to the tokens in circulation. The issuer mints a token when a dollar comes in and burns one when a holder redeems. USDC, issued by Circle, follows this model and publishes regular reserve attestations.

Other designs exist — crypto-collateralized and algorithmic stablecoins — but they carry more peg risk, and the history of algorithmic stablecoins includes notable collapses. For machine-to-machine payments where the amounts must be predictable, fiat-backed reserves are the conservative choice.

An AI agent buying API calls needs predictable prices. If a tool call costs $0.01, the agent's budget logic, the seller's revenue forecast, and the receipt that proves payment all depend on that amount meaning the same thing at request time and settlement time.

Volatile assets break this. A price quoted in ETH can drift between the 402 challenge and on-chain confirmation, and a seller earning thousands of micro-amounts in a volatile token inherits market risk on every call. Stablecoins remove the conversion problem entirely: prices are set in dollars, paid in dollars, and accounted in dollars, so neither side of an automated transaction needs to think about exchange rates at all.

The x402 protocol settles payments in stablecoins, with USDC on Base as the default. When a server responds with HTTP 402, the payment requirement names an exact USDC amount; the agent's wallet signs the transfer, settlement confirms on Base in about two seconds, and the handler runs.

Stablecoins are what make x402's minimum viable price so low. Card networks effectively floor transactions around $0.30 in fees; a USDC transfer on Base costs a fraction of a cent, so per-call prices of $0.01 — the minimum on the Loomal Index — are economically sound.

If you price an MCP server or API on the Loomal Index, you receive USDC — a dollar-denominated asset you can hold, convert, or off-ramp through any major exchange. There is no exposure to crypto price swings between earning and withdrawing, and settlement is final with no chargeback window.

Loomal charges a 5% fee on settled transactions, currently waived, and every payment carries a signed Ed25519 receipt plus a Base transaction hash, so revenue reconciles down to individual calls.