X Revises API Policy, Revoking Reward for Users Posting on Platform

X has revised its API policy to prohibit applications that reward users for posting content on the platform. This move, announced by X product lead Nikita Bier, is aimed at curbing spam and AI-generated content that had been degrading the user experience. The policy change affects a range of InfoFi (information finance) applications, which combine financial incentives with user engagement metrics to reward content creators with cryptocurrency.

The new API restrictions include limits on posting automation, tighter user data access, and reduced API call allowances. These changes have been implemented through authentication protocol updates and endpoint limitations. Developers who previously relied on X's API to distribute financial rewards now face significant technical hurdles in adapting their applications to the new policy.

Market reactions to the policy shift have been immediate. KAITO, the native token of the Kaito platform, fell more than 20% in a single day following the announcement. Other InfoFi-related tokens, such as CookieDAO (COOKIE), also experienced declines. The move has disrupted the core mechanics of several projects, many of which are deeply integrated with X's API infrastructure.

Why Did This Happen?

The policy change reflects X's ongoing efforts to improve user experience by reducing spam and low-quality content. Platform executives have documented a direct correlation between reward-based posting and the proliferation of AI-generated replies and automated engagement. The timing of the shift aligns with broader regulatory scrutiny of social media's role in financial markets and information ecosystems.

Industry analysts note that X's move is in line with a larger trend among social media platforms to prioritize authentic interaction over incentivized content creation. This is consistent with Facebook's 2015 API restrictions and Reddit's 2023 API pricing changes, both of which aimed to control third-party access while promoting first-party revenue streams.

How Did Markets React?

The immediate impact on the cryptocurrency sector was significant. KAITO, one of the most prominent tokens in the InfoFi ecosystem, saw a price drop of more than 14% within hours of the policy announcement. CookieDAO also announced the termination of its Snaps service, which had been used to reward influencers based on engagement.

Other InfoFi tokens experienced declines ranging from 3% to 12%. Blockchain analytics firm Chainalysis reported unusual trading volumes across multiple InfoFi-associated tokens, indicating that the market was adjusting to the new reality. Some exchanges temporarily paused deposits and withdrawals for affected tokens due to volatility concerns.

What Are Analysts Watching Next?

Experts are closely monitoring the long-term implications of X's policy change for both content creators and developers. Content creators who had relied on InfoFi rewards now face the challenge of adapting their monetization strategies. Many creators have already begun diversifying across platforms and revenue streams.

Developers are exploring decentralized alternatives to X's API, including Farcaster and Bluesky's AT Protocol. However, these transitions require significant engineering resources and platform redesign. Some developers have already initiated legal consultations regarding API access revocation, although platform terms of service generally provide broad discretion over API policies.

The broader impact of this policy shift is expected to extend beyond the cryptocurrency sector. Social media platforms continue to balance openness with control, and innovation with user protection. X's decision may set a precedent for how other platforms approach the issue of financially incentivized content creation.

Creators and developers are also watching to see how alternative monetization features might emerge. While X has hinted at developing new monetization tools, no specific timelines or details have been provided. This uncertainty creates challenges for professional content creators who are planning their 2025 strategies.