X (formerly Twitter) caused a significant disruption in the crypto ecosystem by banning applications that reward users for sharing content. This decision directly affected projects known as "InfoFi," which incentivize interaction with tokens, points, or airdrops. Following the ban, tokens like KAITO and COOKIE experienced sharp declines. At the heart of the decision were measures taken by X management against the recent increase in low-quality content, bot activity, and automated reply spam known as "AI slop." Nikita Bier, X's head of product, announced that InfoFi applications that encourage users to share content will no longer be permitted, and their API access has been revoked. According to Bier, this step aims to improve the user experience on the platform and reduce the production of spam content.
Kaito discontinues its Yaps product
One of the projects most affected by this decision is Kaito, an AI-powered InfoFi platform. Following the loss of its X API access, Kaito announced it will discontinue its "Yaps" product, which encourages users to share content. Yaps, which provides a leaderboard ranking users and influencers who actively share on X, especially during airdrop periods, was heavily used in the community-building process of projects.
Kaito founder Yu Hu stated that they have tried different incentive models, filters, and thresholds in the last year, but the problem of low-quality content could not be overcome due to changes in the X algorithm and the uncontrolled incentive structures in the sector. According to Hu, as chains increasingly transform into financial infrastructure, the idea of tokenizing interactions may not provide the expected return in the long term.
Following the news of Yaps' closure, the KAITO token faced intense selling pressure. The token price quickly dropped to the $0.54–$0.57 range, approaching its all-time lows. According to market data, KAITO's market capitalization fell to $185 million, while the total market capitalization of InfoFi projects also decreased to the $355–$360 million range, becoming one of the smallest segments in the crypto market.
Cookie DAO and Other InfoFi Projects Also Affected
Another project affected by the ban was Cookie DAO. Cookie DAO announced it would shut down its “Snaps” product, which rewards users for sharing on X. This development led to a double-digit drop in the COOKIE token. Both platforms similarly encouraged interaction through point, token, and airdrop mechanisms, resulting in users heavily producing AI-powered content.
While X management stated it might support the migration of affected applications to other social media platforms, the timing of the decision was noteworthy. Interest in crypto content has generally weakened recently, with viewership for crypto channels on YouTube falling to their lowest levels in the last five years.
Market Questions
The ban decision brought not only price drops but also some controversy. Following X's announcement, an unusually large amount of KAITO tokens were unstakes. The fact that approximately 1 million KAITO shares are being prepared for liquidation has led to speculation about whether some investors were aware of the decision beforehand.
