In a significant policy shift, X (formerly Twitter) has tightened its reins on applications that utilize ‘InfoFi’ reward models, leading to widespread sell-offs in crypto social tokens dependent on this framework. This announcement has sent ripples across the cryptocurrency market, creating what some experts are calling the “end of InfoFi” on X.
Understanding InfoFi and the New Policy Shift
‘InfoFi,’ short for informational finance, represents a niche within the cryptocurrency space where social media engagement is monetized through tokens or other rewards. These models gained widespread attention in 2025 as crypto innovators sought to blend financial incentives with social interaction by compensating users for activities like posting, replying, or sharing content on platforms like X.
On January 15th, X’s Head of Product, Nikita Bier, announced a striking overhaul in the platform’s developer API policies. The new guidelines now ban apps that financially reward users for their interactions. This change aims to curb the rise of spammy, low-quality engagements—often driven by bots and AI-generated content—clogging user timelines.
With API access revoked, several apps operating under the InfoFi model have lost the technological backbone required to manage user engagement, measure participation, and distribute token-based rewards. Consequently, these projects are left grappling with dependency risks and uncertain futures.
The Impact on InfoFi Tokens
The crypto market has swiftly reacted to this policy change. According to CoinGecko, the market cap for InfoFi-related tokens plunged over 11%, dropping to approximately $367 million as of this writing. Investors seem to be reevaluating their exposure to these projects, particularly those heavily reliant on X’s infrastructure.
Kaito AI (KAITO), one of the most prominent tokens in this category, suffered a sharp 16% price drop, trading at roughly $0.57 after the update. Similarly, Cookie DAO (COOKIE) saw its value fall over 13%, with trading volumes surging to over 17 million amid frantic sell-offs.
These rapid declines underscore a broader issue: centralized dependency. Many InfoFi project leaders failed to diversify their reliance on X for automation, user verification, and distribution processes. As a result, sudden policy changes have left their operations vulnerable to collapse.
Lessons for Crypto Innovators
The downfall of InfoFi models on X highlights the importance of decentralization and risk management for crypto entrepreneurs. Building platforms that rely solely on centralized third parties introduces inherent vulnerabilities, especially in rapidly evolving industries like cryptocurrency.
Projects looking to experiment with tokenized social engagement may now consider alternatives like Threads or Bluesky, as suggested by X in a somewhat cheeky invitation for developers to shift away. However, these alternatives pose their own challenges and should be evaluated carefully.
Looking Ahead
As the crypto space recalibrates to adapt to these changes, platforms promoting sustainable and decentralized reward models may emerge as frontrunners. The critique surrounding InfoFi and its emphasis on quantity over quality has revealed flaws in tokenized engagement mechanisms. Moving forward, user-centric and value-driven models might offer more sustainable foundations for monetizing social engagement.
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