KAITO Plummets 20% as X Bans Incentivized Posting Apps

• X revoked API access for apps that reward users for posting, targeting InfoFi projects and triggering sharp losses in related tokens according to reports.
• Kaito’s native token KAITO fell nearly 20%, reflecting the structural disruption caused by X’s crackdown on incentivized spam.
• Kaito announced the shutdown of its Yaps and open incentive leaderboards, shifting to a more selective creator marketing platform named Kaito Studio as reported.

X, formerly known as Twitter, has taken a firm stance against applications that incentivize users to post content, labeling the practice as a driver of spam and AI-generated replies. The social media platform’s product lead, Nikita Bier, emphasized that these reward-based systems degrade the user experience and undermine the quality of content available on the platform. As a result, many projects that relied on this model, including Kaito, faced immediate market consequences.

Kaito’s founder, Yu Hu, acknowledged the need for change, stating that a fully permissionless distribution system is no longer viable. The platform announced it would replace its reward-driven social features with Kaito Studio, a tiered marketing model designed to foster more meaningful collaborations between brands and creators. This shift signals a move away from open, token-based incentives toward more curated, high-quality partnerships.

The impact on the market was immediate. KAITO, the token associated with Kaito, dropped roughly 20% in a single day following the announcement. Other InfoFi tokens like Cookie’s COOKIE and LOUD also experienced sharp declines, with the broader sector losing 11.5% in market capitalization within 24 hours. These price movements reflect investor concerns about the sustainability of reward-based social engagement models and the potential for further regulatory or platform-based restrictions.

How Will the API Changes Impact the Broader InfoFi Sector?

The InfoFi sector, which relies heavily on social engagement metrics and data scraping from platforms like X, faces a structural shift following the API changes. Many projects within this niche have been built around the idea of incentivizing user participation through token-based rewards, making them particularly vulnerable to policy changes on the platforms they depend on for visibility and distribution.

With X’s decision to block access for incentivized posting apps, these projects now need to reevaluate their business models and find alternative platforms for growth. Some analysts have argued that the reliance on Web2 infrastructure for visibility and engagement is at odds with the decentralized ideals of Web3. However, the practical reality is that platforms like X remain central to the success of many crypto-native projects, especially those in the social and creator economy spaces.

For investors, the sharp price movements in InfoFi tokens highlight the risks of investing in projects that are closely tied to the operational decisions of a single platform. The volatility seen in KAITO and other related tokens underscores the importance of diversification and a deep understanding of the underlying business models.

What Is Kaito's Strategic Shift, and How Does It Address X's Concerns?

Kaito’s response to X’s API changes includes the discontinuation of its Yaps product and incentive ranking system. The platform is replacing these features with Kaito Studio, a model that emphasizes curated, high-quality content creation and brand collaborations. This shift is intended to address concerns about spam and AI-generated content while aligning with the interests of serious creators and brands.

The new model will operate across multiple platforms, including YouTube and TikTok, moving beyond the crypto-specific verticals that previously defined Kaito’s strategy. By doing so, the platform aims to reduce its dependence on a single social media platform and diversify its reach. This also aligns with the broader trend of crypto projects expanding into mainstream industries, a shift that founder Yu Hu has emphasized will define 2026.

Kaito’s pivot also reflects a broader debate within the crypto and social media space about the sustainability of tokenized incentives for content creation. Critics have long argued that such models encourage spam, bot activity, and inauthentic engagement, which is precisely what X is trying to address with its policy changes as reported. By moving to a more selective and quality-focused model, Kaito aims to build a more sustainable platform while maintaining its connection to the creator economy.

The strategic shift is not unique to Kaito. Other InfoFi projects, such as Cookie DAO, have also announced plans to pivot or shut down parts of their platforms in response to X’s API changes. These moves highlight the challenges of operating in a space where platform policies can have immediate and significant impacts on business models and token values.

For the broader market, Kaito’s transition serves as a case study in how crypto projects can adapt to regulatory and platform-based challenges. While the immediate impact has been negative for token holders, the long-term success of the project will depend on its ability to build a more sustainable and value-driven platform that aligns with the evolving expectations of users, creators, and brands.