- The social media platform X has revised its policies of developer API to formally forbid the apps that compensate the users to publish.
- The ban is directed at a specific sector of the industry, namely the “InfoFi” one, which has received criticism due to a flood of the automated reply spam, as well as, low quality AI content.
- Large-scale projects such as Kaito are already declaring the elimination of reward features after the API access of the latter has been instantly revoked.
The social media giant X has gone towards dissolving the increasingly popular “InfoFi” ecosphere by blocking all third-party applications which provide financial incentives to post. On Thursday, the head of product of the platform Nikita Bier confirmed that X already started removing API access to these services to prevent an outbreak of AI-generated content.
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Policy Change Focuses on Post-to-Earn Models
This abrupt attack focuses on a vertical in the crypto sector referred to as Information Finance, or InfoFi. The protocols usually motivate the users to provide details regarding certain tokens or market trends in exchange of points or native crypto assets. Although the projects typically position this solution as a reward mechanism to creators, the consequence of X has been a substantial rise in bot-based interaction.
According to Bier, the reward-based model had resulted in a massive volume of AI slop and reply spam throughout the site. X essentially dismantles the reward distribution mechanism by disconnecting the technical connection through which these apps can track and confirm the posts of users. The platform was optimistic about the fact that the user experience would be enhanced because bots will be made to understand that the financial incentives are gone.
Reaction and Project Termination in the Market
The effect on the crypto market was fast, especially on the tokens based on social engagement platforms. The most popular AI intelligence project, Kaito, experienced a decline of its native KAITO token by almost 20 percent right after the news broke. The founder of the project, Yu Hu, later asserted that the project would eventually sunset its reward program Kaito “Yaps” by admitting that the decentralized content model could not remain applicable with the new limitations of X.
The pressure was experienced in other projects in the industry. The Cookie DAO announced that its COOKIE token had dropped about 15% when it went to cancel existing reward campaigns and shift to enterprise analytics. This sell off wave is indicative that investors believe there is a low avenue ahead of projects that are solely dependent on the infrastructure of X to be the main business model base.
Moving Developers and Technical Barriers
To developers who were left with no platform, X was slightly ironical in his olive branch. Bier mentioned that the company would help concerned teams to migrate their businesses to competing platforms such as Threads or Bluesky. This action is an indication that X is no longer interested in reaping the revenue of these high-volume API users, but more so on cleaning the primary feed.
The technical side implies increased authentication and controls on engagement data. Some of these InfoFi apps were previously paying millions of dollars to gain access to Enterprise API, but X has determined that the price to the overall quality of the platform does not justify the subscription income. Analysts claim this is the pivot point of experiments by SocialFi where the latter have attempted to construct atop centralized Web2 rails.
