X Bans InfoFi Apps, KAITO Token Slides as Incentivized Posting Ends

X has revoked API access for applications that reward users for posting content on its platform, a move targeting the so-called InfoFi (Information Finance) ecosystem. The decision, announced by Nikita Bier, X’s Head of Product, aims to reduce AI-generated spam and low-quality replies that have plagued the platform. Affected developers were given a directive to consider transitioning their businesses to platforms like Threads or Bluesky according to the announcement.

The announcement had an immediate impact on the Kaito token, which dropped over 14% following the policy change. Kaito is one of the most prominent projects in the InfoFi space and had previously seen a fully diluted valuation of around $2 billion.

X has long faced criticism over incentivized posting, which led to a surge in automated content and low-effort posts designed to trigger reward mechanisms. The company cited a need for improved user experience as a core motivation for the API policy change.

Why Did This Happen?

X’s decision to ban InfoFi apps marks a major shift in how it governs third-party access to its data. According to Bier, the policy aims to combat the growing amount of AI-generated content and reply spam that have degraded user experience. The policy change aligns with broader efforts to enforce higher content quality and reduce manipulation through financial incentives.

This move has also been framed as a proactive step ahead of potential regulatory scrutiny. European and U.S. regulators have increasingly focused on the role of social media platforms in financial ecosystems and their responsibilities regarding spam and data misuse.

How Did Markets Respond?

The Kaito token experienced the most immediate and severe drop, with its price falling from $0.70 to near $0.56 in the hours following the announcement. Other InfoFi tokens also saw declines, though not as drastic as Kaito’s according to market data. The Kaito Yapper community, which had around 157,000 members, was among the first to be banned under the new policy. The removal of this group was viewed by some as a decisive step against content farming.

Market analysts attributed the sharp decline to the project’s heavy reliance on X’s API for user engagement and data tracking. The loss of that access has raised concerns about Kaito's long-term viability, particularly if it cannot find alternative platforms to operate on.

What Are Analysts Watching Next?

Technology and market analysts are closely watching how both developers and users respond to this change. On one hand, the ban has been praised for reducing spam and restoring signal to X’s timelines. On the other hand, some critics argue that X is limiting innovation in social media monetization.

Developers now face the challenge of finding new platforms or rethinking their business models. Some are exploring decentralized alternatives like Bluesky or Farcaster, but these platforms offer different infrastructure and user base compared to X.

Investors and analysts are also tracking how X’s move affects broader trends in decentralized social platforms. If X continues to enforce stricter API policies, it may accelerate the adoption of other platforms that offer more flexibility for reward-based posting and data monetization.

The long-term impact on the InfoFi ecosystem remains uncertain. While some projects may adapt and find alternative pathways, others may struggle to sustain their operations without access to X's API infrastructure.

For now, X appears to be drawing a firm line between incentivized content and authentic engagement. The company’s stance may shape how future platforms regulate financial incentives in social media interactions.