X Bans Access to 'InfoFi' Crypto Projects Amid 'AI Slop' Backlash

Elon Musk’s X has banned applications that reward users with cryptocurrency for creating or engaging with content on the platform according to policy changes. The move targets so-called 'InfoFi' projects, which combine financial incentives with social media activity as defined in the policy. X’s Head of Product Nikita Bier stated the changes aim to reduce spam and improve user experience according to company statements.

The policy shift revoked API access for these applications immediately, affecting third-party developers and users who relied on them according to technical reports. Bier cited a rise in low-quality content linked to financial rewards in official communications. The action marks the platform’s most aggressive move against spam since Musk’s acquisition as reported.

X’s decision follows increasing regulatory scrutiny of social media's role in financial ecosystems according to industry analysis. The platform’s new policy aligns with broader industry trends toward restricting automated engagement tools as noted by analysts.

Why Did This Happen?

X executives have documented a surge in spam and AI-generated content driven by financial incentives according to internal reports. The company stated these applications created a “tremendous amount of AI slop & reply spam” as reported. Bier added that users' X experience should improve as bots no longer profit from their activity according to product leadership.

The policy changes also align with global regulatory trends, including the European Union’s Digital Services Act and U.S. Federal Trade Commission guidelines as observed. Bier suggested the move could preempt future regulatory intervention according to industry forecasts.

How Did Markets React?

Kaito, the native token of an InfoFi platform, dropped more than 14% following the announcement according to market data. The token reached a low of $0.56 from $0.7 as tracked. CookieDAO also announced the termination of its Snaps service, a feature that rewarded users for engagement as reported.

Blockchain analytics firm Chainalysis reported unusual trading volumes across multiple InfoFi-related tokens according to their findings. Affected projects faced varying degrees of operational impact, with some relying on X’s API for core functionality as documented.

Cryptocurrency exchanges temporarily paused deposits and withdrawals for some InfoFi-related tokens due to volatility according to exchange reports. The broader decentralized social media sector saw smaller declines compared to Kaito as observed.

What Are Analysts Watching Next?

Dr. Alicia Chen of Stanford University explained that platforms often struggle with balancing growth and content quality according to academic research. She noted that financial incentives for posting often lead to short-term engagement gains but degrade long-term user experience as analyzed.

Platform architecture specialists said the API policy is a key control point for managing user data and engagement according to technical analysis. X’s move could help the platform maintain control as it develops its own subscription services and advertising products as stated.

Developer communities responded with mixed reactions according to community feedback. Some supported the effort to reduce spam, while others criticized it as limiting innovation as reported. Open-source projects like Farcaster and Bluesky saw increased developer interest according to developer surveys.

Affected developers face technical challenges in adapting their applications according to technical assessments. Many InfoFi projects are built around X’s API infrastructure, requiring significant engineering effort to transition to alternative platforms as documented.

Content creators who relied on InfoFi for supplemental income now face uncertainty according to industry reports. Analysts recommend diversifying across platforms and revenue streams to reduce dependence on any single ecosystem as advised.