X Policy Change Impacts InfoFi App Rewards

X, formerly known as Twitter, has updated its developer API policy, effectively banning “InfoFi” apps that reward users for posting. This move aims to combat AI-generated spam and low-quality content by revoking API access. Nikita Bier, X’s Head of Product, announced the policy to eliminate AI slop and reply spam. Affected projects such as Kaito AI and related InfoFi tokens have experienced significant market impacts.

The immediate result of this policy shift is a notable drop in token values, with Kaito AI’s token falling by approximately 16-20%. Other tokens, such as COOKIE, also saw declines, highlighting the potential vulnerabilities in token markets. Developers are now encouraged to move away from depending solely on the X platform, a trend that indicates shifting strategies and alliances within the tech and finance sectors.

Yu Hu, Founder, Kaito AI, responded by announcing the sunset of Kaito’s Yaps program: “After discussions with X, it’s agreed that a fully permissionless distribution system is no longer viable, nor aligned with the needs of high-quality brands, serious content creators, or X as a platform.”

These changes pose significant challenges to the InfoFi sector, reducing market capitalization by over 10-11%. Nikita Bier’s directive also opens avenues for developers to migrate to platforms like Threads or Bluesky. Developers may face pressures to innovate and find alternatives to centralized APIs. Historical trends show that sudden policy changes can require rapid pivots, affecting market dynamics and investment strategies.