KAITO Token Plummets 20% as X Bans Incentivized Posting Apps

Kaito is transitioning from a reward-driven social product to a selective creator marketing platform due to X's updated API policies that limit rewarded posting.

X's decision to clamp down on so-called InfoFi applications has sent fresh shockwaves through the crypto market, dragging several tokens sharply lower and forcing a rethink across a niche that had grown tightly intertwined with the social media platform.

The immediate market reaction was led by KAITO, the token linked to the Kaito platform, which slid roughly 20% in a single day as investors digested what many saw as a structural threat rather than a short-term policy tweak.

X recently updated its policies to restrict applications that reward users for posting content, a move aimed at reducing spam and low-quality engagement. These models, often referred to as "InfoFi," had encouraged users to post frequently in exchange for points or tokens, which over time led to overcrowded timelines and declining content quality. As a result, platforms relying on permissionless reward distribution, including Kaito's Yaps, lost access to key infrastructure.

In response, Kaito founder Yu Hu announced a major strategic shift for Kaito, confirming that the platform is officially sunsetting Yaps and its incentivized leaderboards to usher in a new phase called Kaito Studio. Yaps was originally designed around Web3's permissionless ideals, rewarding users and creators purely on merit for helping brands grow visibility. Despite these efforts, broader changes to X's algorithm and the rise of other InfoFi projects, many with minimal or no filters, meant content quality issues persisted across the crypto ecosystem.

At the same time, teams using Kaito began shifting away from mass distribution and airdrop-heavy strategies toward more targeted, performance-driven approaches. After extensive internal discussions and coordination with X, Kaito concluded that a fully permissionless incentive system no longer aligned with the needs of serious brands, high-quality creators, or the platform itself.

What is the Impact on KAITO Token and NFTs?

The KAITO token dropped nearly 20% in value following the announcement. The token fell from around $0.70 to about $0.56 within hours according to market data. The sell-off extended to Kaito Genesis NFTs, known as Yapybaras, with floor prices collapsing over 50% to 0.21 ETH. Other InfoFi tokens also saw steep declines.

The market reaction suggested forced repositioning rather than thin liquidity. Trading volume jumped nearly 87% to more than $121 million within hours of the announcement. The drop in the KAITO token's value signals a broader shift in the InfoFi sector.

What Are the Implications for the InfoFi Ecosystem?

The episode has shown how dependent large parts of crypto's social layer remain on a single Web2 platform. X's use of automated moderation tools and AI-driven detection has turned it into a powerful gatekeeper, capable of reshaping entire business models.

The broader InfoFi sector now faces an existential shift as the attention economy on X moves from open tokenized rewards to curated, platform-compliant partnerships. This has intensified discussion about alternatives, including decentralized social networks and multi-platform strategies, as builders seek to reduce single-point risk.

Critics had long argued that paying users to post encouraged attention farming and automated content, an accusation that gained credibility as timelines filled with repetitive, AI-generated replies. Following the announcement, Kaito founder Yu Hu said the company would sunset its "Yaps" and open incentive leaderboards, replacing them with Kaito Studio.

What Are the Broader Market and Strategic Considerations?

The move reflects a broader strategic shift away from open, incentive-based models to a performance-driven, curated approach that aligns with X's updated policies and the evolving needs of serious brands and creators in the crypto ecosystem.

Behind the price action lies a deeper debate about whether InfoFi's incentive structures were sustainable. X's decision has forced a rethink across a niche that had grown tightly intertwined with the social media platform.

The decision triggered an immediate sell-off across InfoFi tokens. Kaito, Cookie DAO, BubbledMaps, Loud, Arbus and several others fell sharply within hours as traders priced in the loss of their core distribution and growth engine.

The broader implications of the policy change suggest that InfoFi platforms must evolve or risk being left behind.

What Is the Long-Term Outlook for Kaito and InfoFi?

Kaito founder Yu Hu said the company has been in discussions with X regarding the impending change. Kaito Studio envisions crypto as the future of infrastructure for product enhancement rather than the product itself.

The move also prompts a broader discussion about the role of crypto in various industries. In other words, the future of crypto isn't about turning every vertical into a Web3 version of itself, but about going deeper into what crypto does best.

This shift represents a new phase for Kaito and other InfoFi platforms. As the attention economy on X moves from open tokenized rewards to curated, platform-compliant partnerships, the industry must adapt to a new reality.

The episode has shown that large parts of crypto's social layer remain dependent on a single Web2 platform. X's use of automated moderation tools and AI-driven detection has turned it into a powerful gatekeeper.

The broader implications of the policy change suggest that InfoFi platforms must evolve or risk being left behind.