The Lead
X (formerly Twitter) officially banned ‘InfoFi’ applications, crypto protocols that reward users for engagement, in an immediate policy shift aimed at eradicating automated spam. The crackdown forced Kaito, the sector’s leading protocol, to sunset its flagship ‘Yaps’ program today. The market reaction was violent: KAITO plunged 17% within hours, falling from $0.70 to a low of $0.56 as the utility of its ‘engage-to-earn’ model evaporated.
The Receipt
X Head of Product Nikita Bier confirmed the API revocations, explicitly targeting the sector for degrading the platform’s user experience. Bier stated the incentivized model generated a "tremendous amount of AI slop & reply spam," and that the ban was necessary to restore timeline quality. API access for Kaito and similar apps like Cookie DAO was cut immediately, leaving their reward mechanisms defunct.
Market Impact
The ban effectively breaks the core loop of the InfoFi trade. Kaito (KAITO) struggled to find support, trading down to $0.57 (-17%) as holders exited positions reliant on the ‘Yaps’ reward narrative. Volume spiked 115% to $138M, indicating a mass capitulation rather than a dip-buy opportunity. Other sector tokens, including COOKIE, mirrored the slide with double-digit losses.
The Pivot
Kaito founder Yu Hu acknowledged the "permissionless" distribution model is no longer viable on centralized platforms. The project is pivoting to ‘Kaito Studio,’ a tiered agency model that connects brands with vetted content creators rather than incentivizing mass replies. This shift marks the institutional death of ‘farm-to-earn’ on X, forcing protocols to abandon quantity metrics for curated, compliance-friendly marketing structures.
