The Decline of InfoFi and the Rise of SocialFi in 2025: Navigating Investment Risks and Opportunities in AI-Driven Social Token Platforms

The crypto and Web3 ecosystems in 2025 are witnessing a seismic shift: the decline of InfoFi (information finance) and the ascendance of SocialFi (social finance). While InfoFi, a sector focused on monetizing attention, content, and reputation through AI-driven platforms like Kaito and Cookie.fun, faces mounting challenges such as content homogenization and algorithmic bias, SocialFi is emerging as a more resilient and scalable model. Platforms like UXLINK, Cheelee, and Open Campus are leveraging AI to tokenize social interactions, creating decentralized economies where user behavior directly generates value according to industry analysis. This article examines the investment risks and opportunities in AI-driven SocialFi platforms, contextualized by regulatory hurdles and market dynamics.

The Decline of InfoFi: A Sector Struggling with Scalability

InfoFi's core premise-rewarding users for generating high-quality content or insights-initially thrived in 2025 as AI tools enabled platforms to evaluate and monetize attention as research shows. However, the sector's growth has plateaued. A key issue is content homogenization: AI-driven evaluation systems often prioritize algorithmically optimized content over creativity, leading to a "race to the bottom" in originality according to industry reports. Additionally, scalability remains a hurdle. Platforms like Kaito and Cookie.fun rely on AI to assess user contributions, but their models struggle with nuanced human inputs, resulting in disputes over reward distribution as documented.

The broader crypto downturn in late 2025 further exposed InfoFi's fragility. While NFTs plummeted by 7.38% in 24 hours, InfoFi tokens like Kaito's $KAI and Cookie.fun's $COOKIE saw muted gains, reflecting waning investor confidence. This decline underscores a critical lesson: InfoFi's reliance on speculative content markets makes it vulnerable to macroeconomic shifts and AI-driven commodification according to market analysis.

The Rise of SocialFi: AI as a Catalyst for Decentralized Social Economies

SocialFi, by contrast, is maturing into a robust ecosystem. Unlike InfoFi's content-centric model, SocialFi platforms focus on tokenizing social interactions-such as attention, reputation, and community contributions-to create decentralized value networks as industry reports indicate. AI plays a pivotal role here. For example, Cheelee (CHEEL), a short-video platform, uses AI to reward users for watching and interacting with content, with its token surging by 102.80% in late 2025. Similarly, UXLINK employs AI for reputation analysis and fraud prevention, supporting its vision of a unified digital identity layer for Web3 according to platform documentation.

The market is responding. SocialFi's market cap reached $958 million in 2025, with projections suggesting it could hit $10 billion by 2033 as forecasted. This growth is driven by AI's ability to automate governance, personalize incentives, and enhance user retention. For instance, Open Campus, a decentralized education platform, uses AI to match learners with educators and reward knowledge-sharing, creating a self-sustaining educational economy according to market analysis.

Investment Opportunities in AI-Driven SocialFi Platforms

The rise of SocialFi presents compelling investment opportunities, particularly in platforms that integrate AI for dynamic incentives and fraud prevention. Key areas to watch include:

1. Attention Economy Models: Platforms like Cheelee are redefining how users monetize screen time. By tokenizing attention, these platforms create a direct link between user engagement and economic value as industry reports show.
2. Decentralized Identity and Reputation Systems: UXLINK's focus on verifiable digital identities and AI-driven reputation scoring positions it as a foundational infrastructure for Web3 according to platform analysis.
3. Education and Knowledge-Sharing: Open Campus's AI-powered matching algorithms and tokenized rewards for educators highlight a growing demand for decentralized learning ecosystems as market data indicates.

However, these opportunities come with risks. Algorithmic bias and lack of transparency in AI models remain significant concerns. For example, AI systems used for credit scoring or content moderation can inadvertently exclude marginalized groups according to research. Additionally, cybersecurity vulnerabilities-as seen in UXLINK's 2025 token-minting exploit-expose the fragility of smart contracts and governance mechanisms as documented.

Regulatory and Ethical Challenges: The Double-Edged Sword of AI

The integration of AI into SocialFi is not without regulatory hurdles. Global frameworks like the EU AI Act and NIST's AI Risk Management Framework are pushing for stricter oversight of high-risk AI applications according to compliance reports. In 2025, the U.S. Financial Stability Oversight Council (FSOC) elevated AI as a critical regulatory focus, emphasizing the need for explainability and accountability as research indicates.

Platforms must also navigate data privacy laws, which vary widely by jurisdiction. For instance, the EU's GDPR mandates transparency in AI decision-making, while U.S. states like California enforce strict opt-out requirements under the CPRA according to legal analysis. Non-compliance can lead to severe penalties, as seen in cases like Sephora's $1.2 million fine for mishandling customer data as reported.

Moreover, algorithmic accountability remains a gray area. When AI systems make erroneous decisions-such as UXLINK's token-minting exploit-it is often unclear who bears responsibility: developers, data providers, or deploying institutions according to ethical research. This ambiguity complicates legal recourse and erodes user trust as industry analysis shows.

Conclusion: Balancing Innovation and Risk in 2025

The transition from InfoFi to SocialFi in 2025 reflects a broader shift toward decentralized, AI-driven social economies. While platforms like Cheelee, UXLINK, and Open Campus demonstrate the sector's potential, investors must remain vigilant about algorithmic bias, cybersecurity risks, and regulatory compliance. The key to successful investment lies in platforms that prioritize transparency, human oversight, and ethical AI governance according to industry experts.

As the SocialFi market matures, the next 12–18 months will likely see increased regulatory clarity and technological innovation. For now, the sector offers a unique opportunity to participate in the tokenization of social value-but only for those willing to navigate its complexities.