AltcoinsMarkets
|4 min ReadX Ban Nukes InfoFi as Kaito Pivots to Agency Model
Tariq Al-Saidi
Senior Analyst
Published
Jan 20, 2026
The "Pay-for-Attention" economy just hit a brick wall. On Jan 15, Nikita Bier (X Head of Product) announced a total ban on platforms that incentivize users to engage or post. The impact was immediate: InfoFi (Information Finance) tokens like $KAITO and $COOKIE dumped over 20% as their core utility—farming engagement—was outlawed.
The ban wipes out the product-market fit for platforms like Kaito, Cookie, and Wallchain, which built businesses relying entirely on a single centralized API. Investors and "creators" who relied on farming these incentives are now holding bags of tokens with broken mechanics.
The Goodhart Trap
The collapse was inevitable due to Goodhart’s Law. When a measure becomes a target, it ceases to be a good measure.
Kaito attempted to monetize attention similarly to Instagram's ad model, but with a fatal flaw: it gamified the metrics directly. Once creators realized they were paid for "attention," the meta shifted to rage-bait, AI-generated slop, and low-quality spam. The leaderboard didn't measure quality; it measured who could game the algorithm hardest.
This created a toxic loop where projects paid for hollow engagement to hype Token Generation Events (TGE), while X's user experience degraded into a swamp of bot-like farming.
The AI Accelerant
AI was the final nail in the coffin. While manual farming was annoying, AI automation allowed users to scale spam infinitely—reading tweets, drafting replies, and posting without human intervention. This broke the "Proof of Work" in content creation, forcing X to nuke the entire sector to save its feed.
The Pivot Agencies vs Analytics
The demand for marketing hasn't vanished, but the "decentralized" delivery method is dead. Capital will now flow into two specific verticals:
1. Agencies (Linear): Kaito is already pivoting to "Kaito Studio," a traditional agency model using their data to guide campaigns. Competitors like Radarblock and Surgence will absorb the budget that used to go to farmers.
2. Analytics Layers (Exponential): Using InfoFi tech purely for measurement and reputation tracking, rather than incentivized posting.
Crypto marketing is reverting to the mean. Cold outreach and professional agencies are back, and the era of "Post-to-Earn" farming is over.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.