Kaito token plummets 17%! X platform bans InfoFi, forcing Yaps products to halt

Kaito announces the suspension of Yaps products and incentive leaderboards due to X platform banning applications that reward users for content posting. X explains that the related developer access has been revoked because of a surge in AI-generated spam content. The Kaito Yapper community, with approximately 157,000 members, has been blocked, and $KAITO tokens have fallen by 17%. Kaito will pivot to launch Kaito Studio, a creator marketing platform.

X Platform Policy U-turn Bans InfoFi Mode

Nikita Bier, head of X product, suddenly announced that the platform has revised its policy to prohibit applications that incentivize content posting, citing the surge in “AI spam content and reply spam.” Bier stated that programmatic access to related applications has been revoked, and developers affected can attempt to migrate to platforms like Threads and Bluesky.

This policy shift delivers a fatal blow to the InfoFi (Information Finance) industry. InfoFi refers to a business model where users earn rewards by generating information and insights, with Yaps being a typical example. Users post tweets about brands or projects to earn tokens, a mode especially popular in the Korean market, attracting hundreds of thousands of users with large followings.

However, this incentive mechanism also has side effects. The proliferation of AI-generated content has become X platform’s biggest headache. When users can earn economic returns by posting content, mass generation of low-quality content using AI tools becomes the most cost-effective strategy. These contents often lack substantive value, filled with repetitive promotional language, severely impacting user experience. This policy adjustment by X essentially reflects a choice between platform ecosystem health and third-party business models, ultimately favoring the former.

The immediate consequence is evident. According to blockchain investigator ZachXBT, the Kaito Yapper community on X, with about 157,000 members, was banned after the policy change. This large-scale ban demonstrates X’s determination to enforce the new policy. For Kaito, losing 157,000 active users is not only a quantitative loss but also signifies that its core business model has been completely banned on the largest social media platform.

Kaito Forced to Pivot Yaps into History

(Source: Trading View)

Kaito founder Hu Yu stated that the decision was made after discussions with X, and admitted that under current platform restrictions, the completely permissionless, incentive-driven distribution model “is no longer feasible.” This statement reveals a sense of helplessness and realism. Kaito did not voluntarily give up Yaps but was forced to pivot under the pressure of X’s policies.

Yaps is essentially a product where users earn rewards by posting tweets about brands or projects. When launched, this model was seen as an innovation in Web3 marketing, transforming social media influence into quantifiable economic value. Brands and projects could quickly reach a large audience through Yaps, and users shared content to earn tokens—an apparently win-win model.

However, the problem with this model lies in the distortion of incentives. When content creation itself becomes a profit-making activity, content quality inevitably declines. Users no longer focus on whether the content has value but on how to maximize output to earn more rewards. The widespread use of AI tools has accelerated this problem, allowing users to easily generate大量看似合理但實際上毫無新意的內容. Although this movement attracted hundreds of thousands of Korean users with large followings, it also led to an increase in AI-generated content, ultimately triggering X’s ban.

Fatal Flaws of the Yaps Model

Incentive distortion: Economic rewards prioritize quantity over quality

AI abuse: Low-cost AI content generation tools are widely used

Platform conflict: Contradicts X’s goal of maintaining ecosystem health

Poor sustainability: Reliance on single-platform API permissions, concentrated risks

$KAITO Tokens fell about 17% after the announcement, reflecting market concern over this pivot. The decline in token price is not only a reaction to Yaps stopping but also a pricing of uncertainty about Kaito’s future business model. Investors question whether the new Kaito Studio can replicate Yaps’ success and how Kaito will maintain its market position after losing X as the largest traffic source.

Kaito Studio Transitions to Traditional Creator Marketing

Kaito will replace Yaps with “Kaito Studio,” a more traditional tiered creator marketing platform focusing on curated brand and creator collaborations, data analytics, and cross-platform distribution beyond X (including YouTube and TikTok). This transition marks Kaito’s shift from aggressive Web3 experimentation back to a more mature Web2 model.

The core difference of Kaito Studio lies in “tiered” and “curated.” Unlike Yaps’ open participation, Kaito Studio will screen creators, allowing only those meeting certain quality standards to join. Brand and creator collaborations will no longer be automated reward distributions but will be based on data-driven precise matching. This mode is closer to traditional KOL marketing platforms but incorporates Web3 features like data transparency and token incentives.

Cross-platform distribution is another focus of Kaito Studio. After X platform closed API access, Kaito must diversify risks and cannot rely on a single platform. Covering YouTube and TikTok demonstrates Kaito’s attempt to build a more robust infrastructure. Different platforms have different content formats and user bases: YouTube suits long-form and in-depth content, TikTok excels at short videos and viral spread, while X remains the main battleground for real-time news and discussion. A multi-platform strategy, though increasing operational complexity, reduces risks associated with policies of any single platform.

Kaito states that this transition will not affect other products, including Kaito Pro, API, Launchpad, and the upcoming Markets product, and that $KAITO will continue to operate within the new Studio mode, with details to be announced separately. This statement aims to stabilize market confidence, emphasizing that Yaps is just part of Kaito’s product matrix and core business remains unaffected.

Kaito Pro is a crypto data analysis tool aimed at professional investors; API services provide data interfaces for developers; Launchpad is a project issuance platform. These products are unrelated to X’s policy changes because they do not involve incentivizing users to post content on social media. $KAITO tokens’ role in the new mode remains unclear but may shift from “posting rewards” to “service payments” or “governance voting,” which would alter the token’s value capture logic.

The Cold Winter and Future of the InfoFi Industry

Kaito’s experience may just be the beginning of a cold winter for the InfoFi industry. X’s policy change is not only targeting Kaito but also the entire business model of incentivized content posting. This means all similar InfoFi projects face the same risks. InfoFi applications relying on X platform API must quickly pivot or risk being banned.

Bier suggested that developers affected can attempt to migrate to platforms like Threads and Bluesky. However, these platforms’ user bases and activity levels are far below X, and migration would mean a significant drop in traffic. More importantly, whether Threads and Bluesky will adopt similar policies remains unknown. If InfoFi modes also proliferate on these platforms, they are likely to follow X’s footsteps and implement bans.

The core issue of InfoFi lies in the contradiction between incentive mechanisms and content quality. How to reward users while ensuring content quality is a fundamental challenge for the industry. Kaito Studio’s transition offers a possible direction: shifting from open mass participation to curated creator collaborations, moving from automated rewards to quality-based targeted incentives. Whether this model can succeed will determine the future of the InfoFi industry.