Paul Johnson Kaito winds down crypto-backed Yaps after X bans AI reward programs, triggering a sharp token drop and raising questions over insider activity and the future of InfoFi.
Kaito winds down crypto-backed Yaps as X cracks down on AI slop
The artificial intelligence-driven crypto ecosystem just hit a major speed bump. Kaito winds down crypto-backed Yaps after X imposed a sudden ban on apps paying users to post AI-generated content. The move, announced by X’s head of product Nikita Bier, sent shockwaves through the InfoFi sector, wiping out millions in token value and fueling insider speculation.
Bier announced that X would prohibit any application rewarding users for posting on its platform, describing the flood of AI-generated posts as “AI slop.” He emphasized that the goal was to improve the platform’s user experience and reduce spam generated by incentivized bots. Within hours of the ban, the impact was felt across the crypto ecosystem, most notably in the AI-linked social reward projects Kaito and Cookie DAO.
AI crypto tokens tumble as X bans InfoFi rewards
The decision immediately triggered a cascade of market reactions. The Kaito winds down crypto-backed Yaps announcement came alongside a steep fall in token prices. According to CoinGecko data, the KAITO token plunged over 17 percent to trade around $0.57, while the COOKIE token dropped more than 15 percent to $0.038.
Both Kaito and Cookie DAO had built their user growth models around rewarding engagement on X through their “Yaps” and “Snaps” programs respectively. These schemes paid users in tokens, points, and occasional airdrops for creating or commenting on crypto-related posts. The model encouraged mass participation but also opened the door to widespread automation and low-quality AI responses.
As Kaito winds down crypto-backed Yaps, the broader InfoFi market cap has fallen by roughly 13 percent in the last 24 hours to $359.5 million. Analysts note that this decline may deepen as users reassess the viability of projects reliant on social media-based token incentives.
Concerns over insider moves surface as Kaito stakers react
While most of the market focused on price declines, another story quietly unfolded beneath the surface. Observers began noticing unusual activity among KAITO stakers in the days leading up to X’s policy change. More than one million KAITO tokens are set to be unstaked this Friday — nearly thirty times the typical daily volume.
Given the seven-day unstaking window, this raised immediate questions about whether certain participants had prior knowledge of the impending ban. Although Kaito has not issued a formal comment, several crypto analysts on X suggested that the timing of the unstaking aligns too closely with the ban to be a coincidence.
The speculation adds another layer of intrigue to the saga as Kaito winds down crypto-backed Yaps. Insider activity has long been a concern in decentralized ecosystems, particularly in emerging sectors like InfoFi where oversight is limited.
End of InfoFi’s growth model or a reset moment for AI social crypto
The abrupt halt of Yaps and Snaps has sparked a broader debate over the sustainability of the InfoFi model itself. InfoFi, short for information finance, combines decentralized token incentives with social and AI engagement. The concept exploded in popularity in late 2025 as projects sought to blend community-driven content creation with blockchain rewards.
However, the X ban highlights the fragility of platforms that depend on centralized social networks for growth. Many developers now face a crossroads: adapt their models to focus on direct community engagement or risk losing user traction altogether.
Industry watchers say that while Kaito winds down crypto-backed Yaps, the company may pivot to building AI research and analytics tools independent of social posting rewards. Cookie DAO, on the other hand, is reportedly exploring partnerships with decentralized social networks that could replicate X’s reach without the risk of sudden policy reversals.
X’s crackdown could reshape the crypto social landscape
This event marks one of the first major confrontations between mainstream social media platforms and the rising tide of AI-driven crypto projects. For X, the crackdown reflects an effort to preserve authenticity and prevent spammy engagement loops. For the crypto world, it serves as a stark reminder that true decentralization cannot depend on centralized platforms.
As the dust settles, the future of InfoFi now hangs in balance. Developers are reevaluating token economics, community incentives, and AI integration models that align better with transparency and content quality.
In the short term, the decline in token prices and project suspensions has dented investor confidence. Yet, some analysts believe the shakeout could eventually lead to more responsible AI-driven crypto ecosystems.
For now, one thing is certain: Kaito winds down crypto-backed Yaps not just as a reaction to X’s ban, but as a sign of a maturing industry learning to balance innovation with sustainability.
Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards.
