X users celebrate crackdown on ‘plague’ of AI-led reply spam as InfoFi platforms seek alternatives

X has shut down a growing class of crypto-powered social apps by revising its developer API to prohibit platforms that reward users for posting, a move aimed at curbing bot-driven spam and AI-generated replies that has forced several InfoFi projects to either shut down or radically rethink their business models.

Under the updated rules, X will no longer allow API-connected apps to distribute tokens, points, or cash in exchange for engagement, and has already revoked access from several projects. While the company said it remains open to crypto and web3 developers, the move draws a hard line against one of the sector’s most experimental and controversial ideas: paying people to post.

“There are incredible use cases for CT and crypto/web3 with X API which we will continue to support and showcase,” X developer Chris Park wrote Thursday. “We’ll be sharing some awesome updates and launches very soon! Stay tuned.”

How InfoFi turned posting into a market

InfoFi (information finance) refers to platforms that attempt to turn social media into a kind of market by paying users to generate or amplify content that algorithms deem relevant. Proponents argue the model helps surface valuable information, while critics say it floods timelines with low-effort engagement farming and bot-generated replies.

The best-known example is Kaito, an AI-powered platform that aggregates posts from prominent crypto accounts to identify trending topics, then rewards users (or yappers) who amplify those discussions with its KAITO token. KAITO fell sharply following the API update, reflecting fears that the project’s core mechanics may no longer be viable.

X product chief Nikita Bier, who is also an advisor to Solana Labs, has been openly critical of InfoFi-style engagement in recent weeks. In a since-deleted post on Jan. 10, Bier wrote that “CT is dying from suicide, not from the algorithm.” He argued that because most X users only see 20 to 30 posts a day, crypto accounts waste their limited attention budget on low-value engagement like “gm” greetings. The result, familiar to anyone who uses X, is that many crypto posts are often swarmed by repetitive, automated replies.

That dynamic reflects the broader attention economy, where clicks, likes, and impressions are directly monetized — creating incentives to flood feeds with noise.

“You create a financial incentive for someone to post, it creates more of it. Combine this with AI you get tons of slop. Now the median CT post is kaito slop,” Nic Carter, founding partner of Castle Island Ventures, said in a Jan. 13 post. “Much more noise. X may have taken this into account in their efforts to suppress CT. I don’t blame them.”

Some of crypto’s most prominent builders were more blunt.

“I’m still shocked that some CT people actually supported it,” said Taproot Wizards founder Udi Wertheimer.”X gives you direct access to the most powerful people on planet and the best use you found for it is farming points? Criminally unimaginative.”

The backlash was not limited to crypto. James Seyffart, a Bloomberg Intelligence analyst and frequent critic of reply spam, welcomed the move, saying, “we need as much limiting of this stuff as possible.” Y Combinator founder Paul Graham also cheered the decision, calling AI-generated replies a “plague.”

From engagement farming to shutdowns

The impact was immediate across the InfoFi ecosystem.

Cookie DAO, a prominent InfoFi project, saw its token tumble into double-digit losses on the day of the announcement and said it would sunset its current platform. Kaito, meanwhile, announced it would abandon its token-driven model in favor of a more traditional influencer-marketing approach.

“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,” Kaito founder Yu Hu said. “Kaito Studio will be much closer to a tier-based traditional marketing platform, where brands selectively work with creators who meet defined criteria and deliver against clear scopes.”

Other InfoFi-adjacent platforms will also need to adjust, while others claim they weren’t dependent on incentivized posting in the first place. Xeet, a gamified social arena where creators compete to boost brands, said it had paused all campaigns while it evaluates its future.

“While Xeet has never considered itself a true InfoFi platform, we are obviously affected by this decision,” the company wrote in a post on X. “We will be working with our partners to resolve the obvious open items like, getting payouts distributed for campaigns that have ended, and resolving campaigns that are currently running.”

Noise, which is building an attention market trading platform, announced this week it had raised $7 million in a round led by Paradigm. The startup said it uses mindshare data — not Kaito’s Yaps — and that its markets remain live on testnet. “We are unaffected by this,” Gabriel Perez Carafa told The Block.

“As we approach launch, we’ll share more on how Noise has iterated on using social data and how our markets reference it,” Noise builder @lucacs said Thursday. “We’re committed to transparency on the evolved oracle design.”

What’s ahead on X

Still, some in crypto see X’s move as less about improving discourse and more about asserting control over monetization on the platform. In November 2024, X began compensating creators based on engagement from its premium users rather than ad views.

“So by rugging all the InfoFi platforms, the X team knows creating financial incentives to post tweets leads to AI slop and spam,” said Zach Rynes, a community liaison at Chainlink. “But they can’t extend this logic to X creator payouts? Pretty clear AI slop and spam wasn’t the issue — it’s that X wasn’t getting their cut.”

0xErod, head of marketing at Symbiotic, said that as long as X rewards engagement “at all costs,” users will keep farming it.

“Elon ruined X when it began to incentivize posting,” he said. “While InfoFi as we know it may disappear, people will continue to publish slop as long as there are financial incentives.”