X’s InfoFi Purge Sends KAITO Crashing 20% – Is This the End for DeFi’s Darling?

X just dropped the hammer. The platform's sweeping ban on InfoFi projects triggered immediate market chaos, with KAITO leading the plunge—down a gut-wrenching 20% in a single session.

The Fallout

Panic selling spread faster than a blockchain fork. The move by X, often seen as a crypto barometer, isn't just a policy shift—it's a statement. It questions the very viability of the InfoFi model that blends decentralized data with traditional finance mechanics. Liquidity evaporated, stop-losses triggered, and the usual 'buy-the-dip' crowd hesitated.

A Sector Under Scrutiny

This isn't an isolated incident. Regulatory shadows are lengthening globally. When a major platform pulls the plug, it forces a brutal reassessment. Can these projects survive without key distribution channels? Or is this the first domino in a wider crackdown on permissionless financial hybrids?

The Cynic's Take

Another day, another 20% 'correction' masquerading as a strategic buying opportunity—your portfolio's performance may vary, and probably will.

What's Next?

The immediate future hinges on developer resilience and community response. Will projects pivot, or will they fold? One thing's clear: the era of unchecked growth is over. The market is separating the protocols with real utility from the ones running on hype and hot air. The shakeout has begun.

X Cracks Down on Rewarded Posting, Shaking InfoFi Projects

The shift began with a public statement from Nikita Bier, X’s head of product, who said the company was revising its developer API rules to block applications that reward users for posting on the platform.

We are revising our developer API policies:

We will no longer allow apps that reward users for posting on X (aka “infofi”). This has led to a tremendous amount of AI slop & reply spam on the platform.

We have revoked API access from these apps, so your X experience should…

Bier said that these incentives had fueled a surge in low-quality replies, automated posts, and what he described as “AI slop,” degrading the overall user experience.

X confirmed that API access had already been revoked for affected apps, with Bier adding that developers whose accounts were terminated could seek help transitioning their businesses to other platforms such as Threads or Bluesky.

The announcement landed hard in crypto circles because many InfoFi projects are built around harvesting, analyzing, and monetizing X data.

Platforms like Kaito aggregate posts from large crypto accounts to identify trending narratives and then reward users, often in tokens, for producing content or engagement. That model left them exposed to any restriction on API access or posting incentives.

While X has not declared an outright ban on InfoFi as a category, the practical effect of cutting off rewarded posting has been to disrupt the Core mechanics of several projects overnight.

Market data reflected that shock as KAITO token fell from around $0.70 to about $0.57 within hours, down roughly 17% to 20% on the day, while trading volume jumped nearly 87% to more than $121 million, suggesting forced repositioning rather than thin liquidity.

The token now trades more than 80% below its all-time high of $2.88.

Cookie DAO’s COOKIE token followed a similar path, dropping more than 20% in 24 hours to roughly $0.038, with volume also rising, a sign that holders were reassessing exposure as uncertainty spread.

Kaito, Cookie, Xeet Rethink structure After X Policy Shift

Behind the price action lies a deeper debate about whether InfoFi’s incentive structures were sustainable.

Critics had long argued that paying users to post encouraged attention farming and automated content, an accusation that gained credibility as timelines filled with repetitive, AI-generated replies.

Following the announcement, Kaito founder Yu Hu said the company WOULD sunset its “Yaps” and open incentive leaderboards, replacing them with Kaito Studio, a more selective, tier-based marketing platform designed to work across X, YouTube, TikTok, and other channels.

https://t.co/K1J71SYCpy

Hu framed the shift as an alignment with both X’s policies and brands’ growing preference for targeted campaigns over mass distribution.

Other platforms echoed that reassessment, with Cookie announcing it was shutting down its Snaps creator campaigns after discussions with X, citing the need to protect the integrity of its data products and remain compliant with platform rules.

InfoFi is changing, and it’s time to sunset Snaps.
This is our official announcement. pic.twitter.com/fUIzTZpTa8

Xeet, another project caught in the change, said all campaigns had been paused while it evaluated next steps and worked through outstanding payouts.

By now you have seen the latest decision from X regarding InfoFi.

While Xeet has never considered itself a a true InfoFi platform, we are obviously affected by this decision.

We have been assessing our next steps forward, and will send a communication on that soon.

In the…

In each case, teams stressed that their broader analytics or data businesses would continue, but the rewarded-posting LAYER was no longer viable in its previous form.

The episode has shown how dependent large parts of crypto’s social layer remain on a single Web2 platform.

X’s use of automated moderation tools and AI-driven detection has turned it into a powerful gatekeeper, capable of reshaping entire business models with policy updates.

It has also intensified discussion about alternatives, including decentralized social networks and multi-platform strategies, as builders seek to reduce single-point risk.