X Bloodbath in the InfoFi Ecosystem: "Content Justice" Behind the 24 Million Token Controversy

A seemingly sudden platform cleanup has sparked a wave across the crypto Twitter community. X’s official actions began tightening developer API permissions in mid-January last year, directly targeting the once-popular InfoFi application ecosystem. This move shattered the dreams of participants who relied on “posting to mine” for sustenance and also demonstrated the harsh choices large platforms face regarding content quality.

The Official’s Ruthless Decision: The True Logic Behind API Blocking

Nikita Bier, head of X product, publicly announced this storm. He straightforwardly stated that the platform is revising its developer API policies, no longer allowing applications that incentivize users to post for growth to continue operating. While such incentive mechanisms once thrived within the community, they also became a major driver of AI-generated misinformation flooding the platform.

More importantly, X has decided to abandon this revenue stream. According to Nikita, InfoFi apps contribute millions of dollars annually in API call fees, but these “pass-through fees” are insignificant compared to the platform’s overall revenue. User experience is now X’s strategic chip and future competitiveness. This decision reflects a trend: big platforms are shifting growth priorities from broad traffic acquisition to refined user experience.

Nikita’s advice carries a touch of dark humor—he suggests banned developers turn to Meta’s Threads or decentralized platforms like Bluesky for new opportunities. This statement subtly indicates that X is engaging in a delicate competition with other platforms.

Token Plummets and Project Transformations: The Mystery Behind 24 Million Yuan in Transfers

Market reactions were swift. According to CoinGecko data, within 24 hours of the policy announcement, the total market cap of the InfoFi sector dropped to $350 million, with most related tokens experiencing double-digit declines. Even Kaito’s Yapybaras NFT floor price was not spared, suffering a cliff-like plunge.

Following this, a wave of project transformations emerged. Kaito founder Yu Hu announced plans to gradually shut down the original Yaps and incentive leaderboard systems, and to launch a new product, Kaito Studio. This product adopts a layered marketing model, connecting brands and high-quality content creators across multiple platforms such as X, YouTube, TikTok, and expanding into finance and AI sectors.

Cookie DAO also made a similar move, announcing the immediate closure of the Snaps platform and engaging with the X team to explore future possibilities. Both projects’ statements send an important signal—the policy change was not sudden; teams had sensed the shift early and had already laid out new directions.

However, this also triggered another wave of market skepticism. Data shows that Kaito’s multi-signature contract distributed 24 million KAITO tokens (roughly $13 million at the time) to five addresses two weeks ago. One address linked to the team transferred 5 million tokens to Binance a week ago, suspected to be for sale. More intriguingly, the team’s large token unlocks also peaked in recent days, with 1.1 million tokens unlocking over just 7 days.

Monitoring data from the crypto KOL community makes this timing particularly delicate—did the team accelerate sales after learning of the policy change, or did they have prior knowledge? The answer remains unclear, but market participants’ suspicions have already led to further confidence erosion.

Low-Quality Content Gets Paused, Crypto Ecosystem Begins Reshaping

From a macro perspective, this cleanup by X is not just a policy adjustment but a reshaping of the crypto content ecosystem.

The original idea behind InfoFi was promising—encouraging high-quality content creation through token rewards. But this mechanism was quickly distorted by “wool gatherers.” Many profit-seekers flooded the platform with repetitive, low-quality spam messages, attempting to rapidly build influence through high-frequency posting. This false prosperity not only created noise but also drowned out truly valuable, in-depth content, accelerating the loss of genuine users.

Nikita had previously criticized this phenomenon, pointing out that crypto Twitter users are caught on a self-destructive decline. He noted that ordinary users browse only 20 to 30 posts daily, yet many try to grow their accounts through hundreds of replies each day, ultimately wasting influence. This judgment has been proven correct—the overall enthusiasm in the crypto Twitter circle is indeed waning, and crypto content views on YouTube have fallen to their lowest since January 2021.

However, it should also be noted that the decline in CT activity and the fall of InfoFi are related but independent. The cyclical downturn in the crypto industry itself is also a significant factor. Overall market sentiment, regulatory expectations, and institutional participation changes are all impacting the vitality of this ecosystem.

The Necessary Path to Truly SocialFi

The end of InfoFi can be seen as a painful but necessary cleansing process. For CT users tired of spam, this “ban” acts like a noise filter, finally allowing the timeline to breathe.

For projects still exploring this space, when the shortcut of parasitizing on Web2 giants’ traffic is cut off, establishing a truly user-value-driven SocialFi mechanism becomes the most urgent task. The simple token reward model has proven to have systemic flaws; future innovation must address the deeper question of “how to encourage truly valuable content.”

This is also why Kaito is shifting toward precise marketing, and Cookie DAO is seeking new cooperation models— in an era without platform subsidies, only products that genuinely create value for users can survive. The conclusion of InfoFi may also mark the beginning of a healthier crypto content ecosystem.