X Users Celebrate Crackdown on AI-Led Reply Spam as InfoFi Platforms Seek Alternatives

X, formerly known as Twitter, has revoked API access for InfoFi apps on January 15 due to AI-generated spam and bot-driven replies harming user experience. This move has caused a nearly 20% drop in the KAITO token, from $0.7011 to $0.5671. The decision has also led to significant declines in related assets such as Kaito Genesis NFTs, which saw their floor prices fall over 50%.

The crackdown comes as X product lead Nikita Bier announced that the platform is tightening its developer API policies to reduce spam and low-quality content. Bier stated that projects like InfoFi have led to a 'tremendous amount of AI slop & reply spam' on the platform. The move has been praised by some members of the crypto and Web3 community, including Dogecoin founder Billy Markus, who supported the decision as a necessary step against spam.

Kaito's founder, Yu Hu, confirmed the platform will sunset features like Yaps and incentivized leaderboards, replacing them with Kaito Studio, a tier-based marketing platform. This strategic shift aims to better serve brands, creators, and X itself while aligning with the needs of high-quality content producers.

Why Did This Happen?

X's move is part of a broader effort to improve user experience by reducing spam and AI-generated content. Bier explained that the goal is to help users avoid the 'AI slop' that has become prevalent on the platform. The decision is also seen as an attempt to align with the needs of high-quality brands and serious content creators.

The crackdown has drawn mixed reactions from the crypto and Web3 community. While some support the move, others argue that creators need alternative revenue sources. David Choukroun, founder of Web3 Collective, urged X to reconsider its stance on creator revenue.

How Did Markets React?

The KAITO token dropped nearly 20% immediately after Bier's announcement. Other InfoFi tokens also saw steep declines, with tokens like COOKIE falling 15%, LOUD dropping 16%, and ARBUS sliding about 9% according to market data. The sector's total market value fell 11.5% in one day.

Kaito Genesis NFTs, known as Yapybaras, saw their floor prices collapse over 50% to 0.21 ETH. The move has sparked discussions about the long-term viability of incentive-based models on social media platforms.

What Are Analysts Watching Next?

Analysts are closely monitoring how the market reacts to X's decision. The move reflects a growing trend of platforms taking a firm stance against spam and AI-generated content. Some analysts believe this could lead to a reevaluation of incentive models across the industry.

Investors are also watching whether Kaito's new strategy, Kaito Studio, can regain user confidence and attract creators and brands. The success of this pivot may determine the future of the InfoFi model on X.

The broader implications for the crypto and AI industries remain to be seen. Some investors believe that reducing spam and AI-generated content can improve the quality of user engagement on platforms like X. Others warn that such moves could limit the creative and economic opportunities for content creators.

What's Next for InfoFi?

The future of InfoFi on X is uncertain. The platform has given developers a path to transition their businesses to Threads and Bluesky. However, the success of these alternatives remains to be seen. The InfoFi model is still in its early stages, and the market reaction will likely influence its future trajectory.

Investors are also keeping a close eye on X's broader strategy, including its upcoming feature called Smart Cashtags. The tool will link ticker symbols in posts to real-time financial data, potentially improving the user experience around financial discussions.

The market will continue to monitor how X balances its commitment to reducing spam with the need to support content creators and their revenue models. The outcome of these debates could shape the future of social media and financial engagement on the platform.