Agentgateway adds token exchange, jwt-assertion, and Entra OBO

Shielding AI agents from sensitive MCP / API credentials (secrets, API keys, tokens, etc) is the prevailing best practice pattern to keep sensitive secrets from leaking into AI model conversations or across AI agent boundaries. OpenClaw, for example, has direct file system access in its most general deployment and can read files/secrets/env variables, etc and could easily send these secrets in any requests.

The right way in an enterprise environment: user identity + agent identity tied to an authorization grant, which determines what is allowed to be done. Any calls to MCP servers or APIs have their credentials injected transparently by the infrastructure. The cornerstone of this injection is exchanging an agent or user’s identity for the correct secrets/API keys/tokens.

In the upcoming agentgateway release, we have opensourced two new exchange capabilities, including a bonus third exchange opportunity with Microsoft Entra — all under backendAuth.oauthTokenExchange:

Entra is the important enterprise wrinkle: it does not speak RFC 8693. Its OBO flow is jwt-bearer with requested_token_use=on_behalf_of. Same outcome (user-scoped downstream token), different grant shape — so both grants live under one oauthTokenExchange block.

RFC 8693 token exchange

Default grant. The gateway POSTs the inbound bearer as subject_token to your IdP’s token endpoint and attaches the returned access token upstream.

backendAuth:
  oauthTokenExchange:
    host: idp.example.com:443
    tokenEndpointPath: /oauth2/default/v1/token
    clientAuth:
      clientId: gateway-client
      clientSecret: $OAUTH_CLIENT_SECRET
      method: clientSecretBasic
    audiences:
    - upstream-api
    scopes:
    - read

What the gateway sends (conceptually):

grant_type=urn:ietf:params:oauth:grant-type:token-exchange
subject_token=<inbound bearer>
subject_token_type=urn:ietf:params:oauth:token-type:access_token
audience=upstream-api
scope=read

Optional knobs that matter in agentic setups:

• actorToken — RFC 8693 delegation (act claim). Useful when an agent identity is acting for a user.
• resources — RFC 8707 resource indicators when the AS expects them (common for MCP / API audiences).
• subjectToken.source — read the subject from a non-default header, cookie, or CEL expression instead of Authorization.
• cache — in-memory cache keyed by subject + grant params; TTL capped by the subject JWT exp.

Runnable example: examples/traffic-token-exchange/oauth-rfc8693.

JWT assertion (RFC 7523 jwt-bearer)

Flip grantType: jwtBearer and the same policy speaks JWT bearer instead of token exchange. The inbound credential becomes the assertion (not subject_token). requestedTokenType / actorToken are rejected for this grant — they belong to RFC 8693.

backendAuth:
  oauthTokenExchange:
    host: idp.example.com:443
    tokenEndpointPath: /realms/backend-oauth/protocol/openid-connect/token
    grantType: jwtBearer
    clientAuth:
      clientId: requester-client
      clientSecret: requester-secret
      method: clientSecretBasic
    audiences:
    - target-client

Form shape:

grant_type=urn:ietf:params:oauth:grant-type:jwt-bearer
assertion=<inbound token>
audience=target-client

This grant works for any authorization servers that support JWT Assertion Grant (RFC 7523). This is the grant Keycloak’s JWT Authorization Grant (preview in 26.5+) implements across realms — present a JWT from realm A, get a token from realm B that trusts A. Full two-realm walkthrough: examples/traffic-token-exchange/jwt-authz-grant.

Microsoft Entra OBO

Entra OBO is jwt-bearer with provider-specific extras. The hand-written request looks like:

curl -X POST "https://login.microsoftonline.com/<TENANT_ID>/oauth2/v2.0/token" \
  -H "Content-Type: application/x-www-form-urlencoded" \
  -d "client_id=<CLIENT_ID>" \
  -d "client_secret=<CLIENT_SECRET>" \
  -d "grant_type=urn:ietf:params:oauth:grant-type:jwt-bearer" \
  -d "requested_token_use=on_behalf_of" \
  -d "scope=https://graph.microsoft.com/.default" \
  -d "assertion=<USER_ACCESS_TOKEN>"

Agentgateway produces that same request from config:

backendAuth:
  oauthTokenExchange:
    host: login.microsoftonline.com:443
    tokenEndpointPath: /<TENANT_ID>/oauth2/v2.0/token
    grantType: jwtBearer
    clientAuth:
      clientId: <CLIENT_ID>
      clientSecret: <CLIENT_SECRET>
      method: clientSecretPost   # credentials in the BODY (Entra expects this shape)
    scopes:
    - https://graph.microsoft.com/.default
    additionalParams:
      requested_token_use: '"on_behalf_of"'   # CEL string literal

Gotchas worth calling out:

• requested_token_use is a vendor extension, so it lives in additionalParams, not a first-class field. Values are CEL expressions — a literal string needs the inner quotes: '"on_behalf_of"'.
• Prefer clientSecretPost for Entra so credentials land in the form body (matching Microsoft’s docs). Default clientSecretBasic would put them in an Authorization: Basic header instead.
• Inbound JWT validation still belongs on the route (jwtAuth / MCP auth). Exchange only runs after the gateway has accepted the user.

This is the missing piece after enterprise MCP SSO with Entra: SSO gets the user into the gateway; OBO gets the user out to Graph (or any Entra-protected API / MCP server) without re-prompting login.

Kubernetes: same knobs as a policy

On Kubernetes the same exchange attaches via AgentgatewayPolicy on a Service or Backend:

apiVersion: agentgateway.dev/v1alpha1
kind: AgentgatewayPolicy
metadata:
  name: okta-token-exchange
spec:
  targetRefs:
  - group: ""
    kind: Service
    name: my-backend
  backend:
    auth:
      oauthTokenExchange:
        tokenEndpoint:
          group: agentgateway.dev
          kind: AgentgatewayBackend
          name: okta-token-endpoint
          port: 443
          path: /oauth2/default/v1/token
        clientAuth:
          clientId: "<okta-client-id>"
          secretRef:
            name: okta-oauth-client
        scopes:
        - "<scope>"

Token endpoints are backend references (not raw URLs), so TLS, DNS, and ReferenceGrant rules stay consistent with the rest of the data plane. Client secrets come from Kubernetes Secrets; privateKeyJwt is available when your AS (Okta, etc.) requires signed client assertions.

Beyond single-leg exchange

If every MCP tool call just reused the inbound enterprise JWT, every upstream would see a token that was never minted for it. If every agent SDK keeps its own token vault, you get N credential stores and zero consistent audit which is exactly the OpenClaw-style leak surface from the earlier in this post. Gateway-side exchange keeps secrets out of the agent, preserves user identity (and optional actorToken for agent-on-behalf-of-user), and caches so agent loops don’t hammer the token endpoint.

These single-leg grants are also the building blocks for Cross App Access / ID-JAG (a two-leg composition of token exchange and JWT-bearer). See the traffic-cross-app-access examples if you want to explore that path. Will cover that in depth in future blogs.

Try it

• Standalone examples: RFC 8693 · JWT bearer + Entra OBO shape
• Backend auth docs: standalone backend authentication
• Related reading: Enterprise MCP SSO with Entra · PR #2189 (data plane) · PR #2458 (Kubernetes controller)

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