KAITO Token Slides 17% After X Blocks InfoFi Reward Programs
By [Your Name] – Jan 28 2026
X’s product lead, Nikita Bier, announced this morning that the social‑media platform will no longer allow “information‑finance” (InfoFi) projects to issue rewards for posts made on X. The policy shift triggered an immediate sell‑off in the KAITO token, which dropped from roughly $0.70 to $0.56 within minutes – a decline of about 17% by the close of the trading day, according to data from CoinGecko.
What happened?
- Policy change: X’s head of product declared that any token‑incentivised campaigns that reward users for X activity are now prohibited. The move targets a growing class of “InfoFi” initiatives that use social‑media engagement as a distribution mechanism for crypto rewards.
- Immediate market impact: KAITO, the native token of the eponymous platform that powers “yapping”‑based reward schemes, fell sharply after the announcement. The token’s market cap shrank by an estimated $30 m in the first half‑hour of trading.
- Community response: The KAITO Yapper community on X – a group of roughly 157 k members that routinely promoted projects for token payouts – was also barred from the platform, according to on‑chain analyst ZachXBT.
Background on KAITO and InfoFi
KAITO’s core product enables users to earn token allocations and partner perks by posting about select crypto projects on X. The model, colloquially known as “yapping,” turns every tweet into a potential micro‑campaign for advertisers. While the approach has attracted a sizable following, critics argue that it fuels low‑quality, AI‑generated content that dilutes the authenticity of discourse on X.
In a recent data scrape, more than 70 k “InfoFi” accounts were identified, with only 26 % based in developed economies. The geographic skew suggests a large proportion of participants are operating from regions where crypto incentives may represent a more significant source of income.
Reactions from the ecosystem
- Cookie DAO: The team behind another InfoFi project announced the sunset of its Snaps platform and related creator campaigns, citing the X ban as a catalyst. In an X post, Cookie DAO said it would work directly with impacted projects to resolve outstanding reward commitments.
- KAITO founder Yu Hu: Also on X, Hu confirmed that KAITO will discontinue “Yaps” and its incentivised leaderboards, shifting toward a new product dubbed “KAITO Studio.” The revised offering will resemble a tier‑based marketing service, pairing brands with vetted creators rather than relying on a permissionless rewards system.
- Strategic shift: Hu indicated that discussions with X led to the conclusion that a fully open‑distribution model no longer aligns with the expectations of premium brands, serious creators, or the platform itself. KAITO Studio is expected to focus on crypto as an infrastructural layer for broader product development, rather than positioning crypto as the primary consumer product.
Analysis
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Regulatory pressure on reward‑driven social media: X’s ban reflects a broader trend of platforms tightening controls over token‑based incentive schemes that can be used to manipulate engagement metrics. The decision may pre‑empt potential regulatory scrutiny concerning market manipulation and spam.
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Impact on token economics: The sudden price drop underscores the vulnerability of tokens whose value is tightly coupled to a single distribution channel. KAITO’s market trajectory will now depend on the success of its forthcoming Studio model, which aims to attract higher‑quality brand partnerships.
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Signal to the InfoFi sector: Other projects that rely on “reward‑for‑post” mechanics—such as Snaps, Yapper, and similar platforms—are likely to reassess their business models. The sunset of Cookie DAO’s Snaps and KAITO’s pivot may prompt a wave of consolidation or migration toward more traditional influencer‑marketing frameworks.
- Geographic concentration of participants: The data released by on‑chain researcher ZachXBT highlights that a majority of InfoFi participants are located outside traditionally regulated jurisdictions. This raises questions about how future policy changes will affect the global user base and whether alternative incentive structures will emerge in regions with looser oversight.
Key Takeaways
- X bans all InfoFi reward programs, effectively shutting down token‑incentivised posting on the platform.
- KAITO token plunges 17% to $0.56, erasing roughly $30 m in market value within minutes.
- KAITO and Cookie DAO pivot away from open‑reward schemes toward tier‑based marketing services (KAITO Studio) or complete platform shutdowns (Cookie DAO’s Snaps).
- The broader InfoFi ecosystem faces a crossroads, with projects likely to adopt more conventional advertising models or risk further platform exclusions.
- Regulators and platforms may tighten controls on crypto‑driven social incentives, prompting developers to design distribution mechanisms that comply with emerging standards while preserving user value.
The coming weeks will reveal whether KAITO Studio can attract sufficient brand spend to offset the loss of its former reward engine, and how other InfoFi projects will navigate an increasingly restrictive social‑media landscape.
Source: https://thedefiant.io/news/nfts-and-web3/kaito-plummets-as-x-bans-infofi-rewards
