X revoked API access for applications that reward users for posting content, triggering immediate losses across Information Finance tokens as the platform moved to eliminate AI-generated spam.
KAITO, the native token of AI-driven InfoFi protocol Kaito AI, dropped 20% from $0.70 to $0.56 following the January 15 announcement by X product chief Nikita Bier.
The policy change targeted so-called InfoFi platforms that track user engagement through X's API and distribute crypto rewards based on posting activity and interactions.
Bier stated the apps had generated "a tremendous amount of AI slop and reply spam" across the platform.
Market Carnage Across InfoFi Sector
The selloff extended beyond KAITO to other engagement-based tokens, with Cookie DAO's COOKIE falling 15% and LOUD declining 16% in the hours after the announcement.
Kaito's Yapybaras NFT collection saw floor prices collapse over 50% to 0.21 ETH, according to OpenSea data.
The broader InfoFi sector lost 11.5% in market capitalization within 24 hours, reflecting concerns about projects heavily dependent on X integrations.
Bier clarified that affected developers were already paying millions for Enterprise API access, emphasizing that X rejected the business model entirely rather than seeking additional revenue.
Kaito Pivots to Traditional Model
Shortly after X's announcement, Kaito founder Yu Hu announced the project would sunset its Yaps rewards program and transition to Kaito Studio, a tier-based marketing platform.
Hu acknowledged that despite experimenting with eligibility filters and higher thresholds, quality issues persisted across crypto-focused social engagement programs.
The new model targets selective partnerships with content creators across multiple platforms including YouTube and TikTok, moving beyond crypto-specific verticals.
Crypto investigator ZachXBT applauded X's decision, stating the "inorganic activity and fake metrics" had made the platform "borderline unusable."
The policy shift leaves InfoFi projects built around post-to-earn mechanics facing fundamental business model questions as X draws a firm line against financially incentivized engagement.