For a long time, the InfoFi model—represented by Kaito’s "Yaps" and Cookie DAO’s "Snaps"—incentivized users to post discussions on X in exchange for tokens. While this "Post-to-Earn" model drove massive traffic, it also generated a surge of "AI Slop" and repetitive bot-like engagement.
Background of the Policy
Nikita Bier, a product lead at X, stated that InfoFi apps exploited APIs to incentivize low-quality content, severely degrading the user experience. To maintain the quality of the social ecosystem, X decided to revoke API access for these applications.
Market Chain Reaction
Following the ban, the InfoFi sector saw a rapid decline in market value. The KAITO token price plummeted from approximately $0.71 to $0.54, a drop of over 20% in a short window. Other tokens in the same sector, such as $COOKIE, also saw declines of over 15%. This reflects deep market concerns regarding the survival of projects that rely exclusively on a single social platform’s API.
KAITO Project Controversy: Data vs. Response
While its business model faced an existential threat, on-chain data disclosures pushed Kaito into a crisis of trust.
Unusual On-chain Activity
According to monitoring by on-chain analysts, in the 7 to 11 days preceding X's official ban, Kaito’s multi-sig wallets transferred approximately 5 million KAITO tokens (worth roughly $2.8 million) to exchanges. Additionally, on the Friday following the announcement, over 1 million KAITO tokens were unstaked—a volume 20 to 30 times higher than usual daily averages.
Community Suspicions and Team Statements
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The Allegations: Many investors believe the project team, while negotiating API issues with X, gained advance knowledge of the impending "bearish" news and "front-ran" the market to cash out at high prices, leaving retail investors to bear the losses.
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Official Response: Kaito founder Yu Hu denied these claims, stating that the platform’s transition had been in the works for months and was not a sudden reaction. He clarified that the official evaluation notice from X arrived on January 13, followed by a legal letter on the 14th. However, the overlap in timelines has failed to fully appease a community angry over perceived "information asymmetry."
A Potential Boon for Exchange Content Plazas
While InfoFi projects have taken a hit on social platforms, this shift may not signal the end of "content incentives," but rather a transfer of power.
Exchange Content Plazas (such as Binance Square) are viewed as the primary beneficiaries of this change.
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Closed-Loop Ecosystem Advantages: Unlike relying on a third-party platform like X, exchange-owned content plazas offer higher autonomy and are not at risk of sudden API termination.
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Refined Brand Placement: Kaito subsequently announced the launch of "Kaito Studio," pivoting toward a tiered marketing platform. This move toward "boutique and targeted" incentives aligns perfectly with the current creator programs hosted by major exchanges.
Industry Insight: X’s move aims to filter out the "noise," but the crypto community's demand for high-quality content remains. In the future, InfoFi may evolve from "mass traffic farming" to "precision distribution."
The Platform Risk of Web3 Applications
The KAITO controversy serves as a wake-up call for Web3 developers regarding the fragility of parasitic growth. Any business model built entirely on a centralized platform’s API faces the permanent risk of being "unplugged" at any moment.
For users, monitoring on-chain data transparency (such as token unlocks and flows) often provides a more reliable indicator than official project statements. Currently, Kaito is attempting to pivot toward a multi-platform strategy involving YouTube and TikTok, while launching Kaito Studio with a focus on professional data. Whether this pivot can rebuild community trust will depend on the team’s subsequent product delivery and adjustments to their tokenomics.