Kaito.ai and Cookie DAO experienced significant token declines after X prohibited payment incentives for AI-generated content on its platform. This decision, communicated by X's head of product Nikita Bier, aims to enhance the user experience by reducing the prevalence of what is termed "AI slop."
In a statement on Thursday, Bier announced, "Apps rewarding users for posting on X, known as 'infofi,' will no longer be permitted. This has resulted in excessive AI-generated content and spam replies." Bier added that the platform has revoked API access for these apps, suggesting that users will soon notice a decline in bot activity as financial incentives disappear.
Following Bier's announcement, Kaito revealed plans to discontinue its "Yaps" initiative, which rewarded users for engaging on X, causing its KAITO token to drop significantly. Similarly, Cookie DAO announced the termination of its "Snaps" program, leading to a decline in its COOKIE token value.
Both Yaps and Snaps offered points, tokens, and airdrops to users for interacting with crypto content on X, often resulting in reliance on AI for generating content. X has pledged to support affected applications seeking to transition to other social networks.
Market Impact
Data from CoinGecko indicates that KAITO dropped by 17.7% to $0.57, while COOKIE fell by 15.5% to $0.038 following the ban. Overall, the InfoFi crypto market capitalization has decreased by 13% in the last 24 hours, now standing at $359.5 million.
Allegations of Insider Knowledge
The ban has prompted accusations of insider trading, with claims that some KAITO stakers might have been aware of the impending announcement. Notably, over 1 million KAITO tokens are set to be unstaked on Friday, an unusually high amount suggesting insiders might have had prior knowledge, according to crypto analysts.
This situation is reminiscent of ongoing debates within the crypto community, highlighting the need for transparency and fair practices. As the landscape evolves, platforms like X are taking steps to ensure a more authentic and engaging user experience.