USDX Policy Shift Triggers InfoFi Collapse as Social Token Prices Slide Across Crypto Markets
API Crackdown on Rewarded Posting Forces InfoFi Projects to Pivot
TL;DR
- X revoked API access for InfoFi-style reward apps on Jan. 15, triggering sharp sell-offs across crypto social tokens.
- Kaito fell about 20%, COOKIE dropped roughly 15%, and the broader InfoFi sector lost over 10% of its ~$367M coin market cap.
- Projects are abandoning permissionless reward models in favor of tiered, traditional marketing structures.
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X moved decisively to shut down InfoFi-style crypto applications after Head of Product Nikita Bier announced that apps rewarding users for posting would no longer be permitted API access. The change, disclosed on Jan. 15, targeted systems blamed for fueling AI-generated spam and low-quality engagement, immediately disrupting a fast-growing niche of crypto-linked social platforms.
Bier framed the move as a quality-control measure, saying reward-based posting had produced “a tremendous amount of AI slop & reply spam.” The policy revision effectively removed the technical backbone of InfoFi projects, many of which relied on X’s data and engagement rails to distribute points, scores, or tokens tied to posting behavior.
Market reaction was swift. Kaito, one of the most visible InfoFi platforms, dropped roughly 20% shortly after the announcement before a mild recovery, reflecting direct exposure to the policy shift. The project’s core reward mechanism, known as Yaps, was quickly sunset, with founder Yu Hu confirming the permissionless distribution model was no longer viable under X’s rules.
Hu said the old structure no longer aligned with the needs of serious creators, brands, or the platform itself. Kaito announced a transition toward Kaito Studio, described as a tier-based, traditional marketing product, signaling a sharp departure from open-ended token incentives that previously drove user participation.
Cookie DAO followed a similar path, ending its Snaps reward program and citing the need to protect data integrity and long-term product credibility. Its COOKIE token slid about 18% in the aftermath, adding to broader pressure across the InfoFi segment as investors reassessed sustainability under tighter platform governance.
Across the sector, the combined InfoFi coin market cap, estimated near $367 million before the announcement, fell more than 10%. The drawdown reflected both forced unwinds and a repricing of business models that had depended heavily on social engagement incentives rather than direct revenue.
Community sentiment around the crackdown remained divided. Some analysts and blockchain investigators welcomed the cleanup, arguing reward mechanics had flooded timelines with automated replies and repetitive content. Others warned the move exposed how fragile tokenized social models can be when built atop centralized platforms.
This article has been refined and enhanced by ChatGPT.
