X Bans InfoFi Projects, KAITO Plummets 20% — Is This the End?

The recent decision by X to impose restrictions on InfoFi applications has significantly impacted the cryptocurrency market, particularly affecting the KAITO token. This article explores the implications of this ban and how various projects are adjusting their strategies in its wake.

Key Takeaways

X's restriction on InfoFi applications sent KAITO down by approximately 20%.
The CEO of X indicated that the changes in API policies targeted user incentives, decreasing the quality of content.
KAITO and other InfoFi tokens are forced to rethink their business structures due to these new limitations.
Several projects, including Cookie and Xeet, have paused their campaigns to reassess their strategies.

X Bans InfoFi Projects, KAITO Plummets 20% — Is This the End?

X's Crackdown on Rewarded Posting Affects InfoFi Projects

X's decision to tighten its rules on InfoFi applications has sent ripples through the cryptocurrency market, causing several tokens to decline sharply. This is particularly true for KAITO, the token linked to the Kaito platform, which fell around 20% in just one day as investors reacted to what many perceive as a significant threat rather than a temporary policy shift.

The Change in Policy

The crackdown began with a statement from Nikita Bier, X's product head, detailing revisions to developer API rules intended to block apps that reward users for posts made on the platform.

Bier remarked that these incentives had led to a rise in low-quality responses, automated content, and “AI slop,” ultimately detracting from the user experience.

In response, X announced that access to the API had already been revoked for several affected applications. Bier advised developers whose accounts were closed to seek assistance in transitioning their businesses to other platforms like Threads or Bluesky.

This announcement hit the crypto community hard, as numerous InfoFi projects are built around the collection, analysis, and monetization of data from X.

Platforms like Kaito usually aggregate posts from prominent crypto accounts to identify trending topics, rewarding users with tokens for their engagement and contributions. However, this model is now vulnerable to a restriction on API access and posting incentives.

While X has not explicitly prohibited InfoFi as a category, the practical result of restricting rewarded posts has interrupted the core functionality of many projects almost overnight.

Market data reflected this sudden shock, with KAITO's token dropping from approximately $0.70 to about $0.57 within hours—a decline of around 17% to 20% for the day. Trading volume surged nearly 87%, exceeding $121 million, indicating a need for forced repositioning rather than a lack of liquidity.

Market Data for KAITO Token

Currently, the token's price stands more than 80% below its peak of $2.88.

The COOKIE token from Cookie DAO also experienced a similar downturn, plummeting over 20% to about $0.038 within 24 hours. Volume for COOKIE increased as holders reassessed their risk amidst growing uncertainties.

Market Data for COOKIE Token

Reevaluating Structures After X's Policy Shift

This price volatility has sparked a broader discussion about the sustainability of InfoFi's incentive structures.

Critics have long contended that compensating users for posting fosters attention-seeking behavior and automated content—claims that gained traction as timelines began to fill with repetitive, AI-generated responses.

Following X’s announcement, Kaito founder Yu Hu revealed plans to phase out its “Yaps” and the open leaderboard incentives, instead introducing Kaito Studio as a more refined, tier-based marketing platform that can operate across X, YouTube, TikTok, and others.

Hu framed this change as a realignment with X’s policies and an adjustment to brands’ growing demand for more targeted campaigns versus mass distribution.

Other platforms, like Cookie, made similar reassessments, deciding to discontinue their Snaps creator campaigns due to discussions with X, underscoring the need to prioritize the integrity of their data products and comply with platform regulations.

Xeet, another affected project, announced a pause on all campaigns while it evaluates its next steps and settles pending payouts.

All affected teams emphasized that their broader analytics and data services will remain operational; however, the previous model of rewarded posting is no longer feasible.

This event has highlighted how reliant many parts of the crypto social ecosystem are on a single Web2 platform.

X's use of automated moderation tools and AI detection has positioned it as a powerful gatekeeper, capable of altering entire business models through policy changes.

It has also heightened discussions regarding alternatives, including decentralized social networks and multi-platform strategies, as developers aim to mitigate risks associated with dependence on singular platforms.