Lede
Social media platform X has officially banned AI-powered cryptocurrency platforms Kaito.ai and Cookie DAO from paying users to post content, a move aimed at curbing the proliferation of so-called “AI slop” on the site. X head of product Nikita Bier announced on Thursday that the platform would no longer allow applications that reward users for posting, a practice often referred to as “InfoFi.” According to Bier, these reward-based systems have led to a tremendous amount of automated reply spam and low-quality content that has negatively impacted the broader user experience. To enforce this new policy, X has revoked API access from the affected apps, with the expectation that content quality will improve once automated bots realize they are no longer being financially incentivized.
The impact of this policy was immediate for the developers involved. Within an hour of the announcement, Kaito.ai confirmed it would sunset its “Yaps” product, which previously rewarded users for posting on X. Similarly, Cookie DAO announced that its similar “Snaps” product would also be wound down. Both products were central to the incentivized engagement models used by these platforms, and their removal signals a major shift in how social media networks interact with decentralized finance and information-incentive protocols. This crackdown represents a significant barrier for the InfoFi sector as it seeks to maintain its footprint on major social media platforms.
Context
The rise of the InfoFi ecosystem on X was characterized by products like Yaps and Snaps, which created financial incentives for social media engagement. These applications rewarded users with points, tokens, and potential airdrops in exchange for posting and interacting with cryptocurrency-related content. However, this model frequently led users to utilize artificial intelligence to generate rapid-fire, low-value responses to maximize their rewards. X officials categorized this influx of automated content as “AI slop,” noting that it contributed to a significant increase in reply spam across the platform. The revocation of API access is a direct measure to dismantle the technical infrastructure that allowed these reward schemes to function.
While the crackdown has disrupted the current operations of Kaito.ai and Cookie DAO, the platforms have been forced to retreat from the site. X has indicated that it would support affected applications that are seeking to migrate their services to other social networks. This suggests that while X is no longer willing to host incentivized posting models, the developers may find a home for their systems on alternative platforms. However, the loss of access to X’s massive user base and its integrated crypto community presents a formidable challenge. The shift in policy highlights the vulnerability of crypto projects that rely on centralized social media APIs to drive their core engagement and token distribution mechanisms.
Impact
The enforcement of the ban triggered a sharp decline in the market value of the associated tokens and the broader InfoFi sector. Following the news of the API revocation and the subsequent sunsetting of the Yaps product, the KAITO token fell 17.7%, reaching a price of $0.57. Cookie DAO’s native token, COOKIE, also saw a major fall, tanking 15.5% to settle at a value of $0.038. These losses were not isolated to individual projects but reflected a wider trend across the category. Data from CoinGecko shows that the broader InfoFi crypto market capitalization is now down 13% over the last 24 hours, currently valued at approximately $359.5 million.
This market volatility underscores the significant risk investors face when backing projects that are dependent on third-party platform policies. The winding down of key products like Snaps and Yaps effectively removes the primary utility and demand drivers for these tokens within the X ecosystem. As the tokens fell, the rapid contraction of the InfoFi market cap demonstrated the sector’s sensitivity to social media infrastructure changes. The loss of a major distribution channel has forced a rapid repricing of these assets as the market adjusts to a landscape where incentivized engagement on X is no longer a viable growth strategy for crypto protocols.
Outlook
In addition to the immediate market impact, the ban has sparked concerns regarding suspicious activity within the KAITO ecosystem. Reports have surfaced that over 1 million KAITO tokens are set to be unstaked this coming Friday. This volume is notably high, representing an amount that is 20 to 30 times higher than the usual unstaking levels seen on the network. Because the unstaking period for the protocol takes seven days to complete, the timing of these requests suggests they were initiated several days before X made its public announcement regarding the API ban and the removal of the Yaps product. This discrepancy has led some crypto analysts to suggest that insiders may have received early information about the impending enforcement actions.
The massive unstaking event scheduled for Friday could lead to further downward pressure on the token’s price as more supply becomes liquid in a market already reeling from the ban. For the InfoFi sector as a whole, the outlook remains uncertain as projects must now find alternative ways to incentivize engagement without violating the terms of service of major social platforms. While some developers may attempt to migrate to other networks, the effectiveness of the incentivized-posting model remains unproven outside of the large-scale environment provided by X. The coming weeks will be critical as these platforms attempt to address the allegations of potential insider activity while restructuring their product offerings.
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