How Agentic Wallets Work: Architecture and Security Model

Agentic wallets separate wallet control from direct key access through a multi-layered architecture designed for autonomous AI operation.

Component 1: Agent Skills (Pre-Built Financial Operations)

Instead of requiring agents to construct blockchain transactions from scratch, agentic wallets provide plug-and-play skills. The core library includes:

• Authenticate: Email OTP-based agent identity verification
• Fund: Add USDC to agent wallets
• Send: Transfer funds to addresses or other agents
• Trade: Swap tokens on decentralized exchanges
• Earn: Stake or provide liquidity for yield

Each skill abstracts underlying complexity. When an agent calls the Trade skill, the infrastructure automatically handles token approvals, DEX routing, slippage protection, and transaction signing.

Component 2: x402 Protocol (Machine-to-Machine Payments)

The x402 protocol enables agents to pay for services programmatically. Named after the HTTP 402 "Payment Required" status code, planned but never implemented in traditional web infrastructure, x402 has processed over 50 million transactions since launch.

The protocol powers: API paywalls (agents authenticate and pay per request), compute resource metering (agents rent processing power as needed), data stream subscriptions (agents access premium information feeds), and agent-to-agent transactions (agents pay each other for services).

Unlike credit card processing or bank transfers that require human confirmation and take days to settle, x402 executes at code speed with per-transaction costs measured in cents, not percentage fees.

Component 3: Trusted Execution Environments (Key Security)

Private keys never leave Coinbase's secure infrastructure. They reside in Trusted Execution Environments (TEEs)—hardware-isolated secure enclaves (typically Intel SGX or AMD SEV technology) that cryptographically prevent unauthorized access.

Agents submit transaction requests through APIs. The TEE validates the request against spending limits, signs the transaction if approved, and broadcasts it to the blockchain. If an agent's host environment is compromised, attackers cannot extract the private key or bypass spending controls. The agent itself never sees the key, only the wallet address and transaction capabilities within its authorized parameters.

Component 4: Programmable Guardrails (Autonomous with Limits)

Developers set two types of spending controls:

• Session caps: Maximum total amount an agent can spend within a defined time window (e.g., $500 per 24-hour period)
• Transaction limits: Maximum individual payment size (e.g., $100 per transaction)

These parameters are enforced at the infrastructure level, not relying on agent logic. Even buggy or manipulated agents cannot exceed their authorized spending.

Component 5: Compliance Screening (Built-In Risk Controls)

Every transaction passes through Know Your Transaction (KYT) screening before execution. The system checks recipient addresses against sanctions lists, analyzes transaction patterns for suspicious activity, and flags high-risk counterparties. Transactions that fail screening are automatically blocked with no agent action required.

Security Comparison Table

Requirement	Standard Crypto Wallet	Agentic Wallet
Transaction approval	Manual per transaction	Programmatic within limits
Key management	User holds private keys	Keys in secure enclaves, agent uses APIs
Spending controls	All or nothing access	Granular session caps and transaction limits
Integration	UI-based for humans	API-first for programmatic access
Security model	Assumes human review	Assumes autonomous operation within guardrails