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Quick question on the Smart Routing layer: when an upstream MCP server returns HTTP 402 (x402 payment required), does your proxy pass that status through so the client can run its own payment handler, or is it caught and flattened into a generic error upstream of Claude Code? The answer decides whether paid third-party MCP servers can negotiate through mcp.hosting at all, or whether everything has to be prepaid inside the account.

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Good question, the answer is simpler than the setup suggests, because for most servers mcp.hosting isn't actually in the data path.

When you install a server, your client (Claude Code, Cursor, etc.) ends up with the upstream's endpoint written into its own config and talks to it directly. No proxy, no status rewriting, x402 is whatever the upstream sends, unmodified, and your client-side payment handler runs natively.

So paid third-party MCP servers can absolutely negotiate through mcp.hosting-installed configs, and the hosted-proxy path doesn't break x402.

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