X Takes Action Against InfoFi Reward Models, Causing Crypto Social Token Sell-offs

X has implemented new restrictions on cryptocurrency applications that incentivize user engagement on its platform. This policy change has adversely impacted several social tokens associated with the “InfoFi” framework, leading to sell-offs and declines in market value.

Key Takeaways

X has revised its developer API policies to restrict applications rewarding users for content engagement.
The policy shift targets InfoFi models that incentivize posting, leading to declines in related tokens.
Affected tokens saw significant market cap drops, with notable sell-offs observed among major projects like Kaito AI and Cookie DAO.
The situation underscores the risks associated with crypto projects dependent on centralized platforms for their operations.

X has taken significant steps to limit a growing category of cryptocurrency-linked applications that reward users for posting or interacting on its platform. This policy adjustment has already had notable effects on tokens associated with the so-called "InfoFi" models.

On January 15, X's Head of Product, Nikita Bier, announced revisions to the developer API policies, specifically prohibiting applications that financially motivate users to generate content. According to Bier, the goal is to reduce the prevalence of automated replies, poor-quality interactions, and AI-generated spam that have been cluttering timelines.

As part of this update, X has revoked API access from the affected applications, cutting them off from the infrastructure they relied on for tracking engagement and distributing rewards. Bier also mentioned that developers whose accounts have been terminated could receive support in moving their products to alternative platforms like Threads or Bluesky, which some view as a subtle dismissal of the InfoFi model.

Policy Shift Affects InfoFi Reward Mechanics

This decision directly impacts projects that offer users tokens, points, or other incentives for posting, replying, or promoting content on X. These reward systems, often referred to as “InfoFi” or “attention finance,” gained popularity in 2025 as crypto projects tried to monetize social engagement and the flow of information.

However, critics have long contended that this model prioritizes quantity over quality, resulting in bot activity and spam rather than genuine engagement. X’s updated policy formalizes this viewpoint by indicating that reward-driven posting is now incompatible with its API ecosystem.

Decline in InfoFi-Linked Tokens

According to CoinGecko's sector heatmap, there were widespread declines among various InfoFi tokens. As of this writing, the market cap had fallen by more than 11%, totaling approximately $367 million.

InfoFi crypto tokens heatmap

This downturn suggests that investors are reassessing their exposure to projects dependent on X-based incentives, rather than reacting to specific news from individual projects. Kaito AI [KAITO], a prominent project in this space, experienced a sharp sell-off shortly after the policy announcement. The token plummeted nearly 16%, trading at around $0.57, with a noticeable spike in trading volume.

Kaito 12-hour price trend chart

On-chain indicators confirm increased distribution during this decline. Similarly, Cookie DAO [COOKIE] faced a comparable reaction, with its token dropping over 13% to around $0.038 and a trading volume exceeding 17 million at the time of writing.

Centralized Platform Risks Highlighted

This event emphasizes a persistent issue for crypto projects that depend on centralized platforms: the risk of policy changes. Although InfoFi models aimed to tokenize attention and participation, many were heavily reliant on X for distribution, automation, and verification of engagement. This reliance has left them vulnerable to unforeseen policy adjustments.

The announcement has sparked immediate responses within crypto communities, with many declaring this a potential turning point—perhaps the “end of InfoFi” on X.

Final Thoughts

As X continues to refine its policies, projects within the InfoFi model must navigate a new landscape where traditional incentivization strategies may no longer apply. The implications of this shift will likely reverberate through the crypto ecosystem, prompting developers to explore alternative models for encouraging user engagement.