X’s Devastating AI Slop Ban Crushes Kaito and Cookie DAO Crypto Rewards Programs

In a sweeping policy shift that sent shockwaves through the cryptocurrency and social media sectors, X (formerly Twitter) has implemented a devastating ban on applications that pay users for posting content, directly targeting what the platform’s leadership calls ‘AI slop.’ The immediate consequence saw artificial intelligence-powered crypto platforms Kaito.ai and Cookie DAO forced to wind down their reward programs, triggering double-digit percentage collapses in their native tokens within hours of the announcement on Thursday, March 13, 2025. This decisive move by X’s head of product, Nikita Bier, represents a significant escalation in the battle against low-quality, algorithmically-generated content that has flooded social networks, while simultaneously upending emerging crypto-based creator economies.

X’s AI Slop Ban Targets Crypto Reward Mechanisms

X’s product leadership made the policy change unequivocally clear. Nikita Bier announced publicly that the platform would no longer permit applications rewarding users for posting on X, a category often referred to as ‘infofi’ or information finance. Bier explicitly linked these programs to what he termed ‘a tremendous amount of AI slop and reply spam on the platform.’ Consequently, X revoked API access from the affected applications, a technical enforcement measure designed to immediately halt their operations. The company stated this action should improve the overall user experience once automated bots recognize the cessation of payments. Furthermore, X indicated it would support affected applications seeking to migrate their services to alternative social networks, though this offers little immediate solace to projects built specifically around X’s ecosystem.

The Immediate Impact on Kaito’s Yaps and Cookie DAO’s Snaps

The enforcement was swift and severe. Within one hour of Bier’s announcement, Kaito confirmed it would sunset its ‘Yaps’ product, which had rewarded users with points, tokens, and airdrops for posting and engaging with cryptocurrency content on X. Similarly, Cookie DAO announced the winding down of its analogous ‘Snaps’ product. Both platforms had incentivized user activity, which frequently led participants to employ artificial intelligence tools to generate responses and content efficiently, thereby maximizing their rewards. This created a feedback loop where AI-generated posts attracted more AI-generated engagement, fundamentally altering the nature of discourse in those crypto-centric corners of the platform.

Token Markets React With Sharp Declines

The financial markets reacted with pronounced negativity to the sudden erosion of these projects’ core utilities. According to data from CoinGecko, the KAITO token experienced a precipitous drop of 17.7%, falling to approximately $0.57. The COOKIE token faced a similar fate, tanking 15.5% to around $0.038. This sell-off contributed to a broader downturn in the so-called ‘InfoFi’ or information finance cryptocurrency sector, whose aggregate market capitalization declined by 13% over 24 hours to roughly $359.5 million. The market response highlights the dependency these tokens had on their specific social media utility, and their vulnerability to unilateral platform policy changes.

Allegations of Insider Knowledge Surface

Adding controversy to the financial fallout, the ban sparked allegations of potential insider trading or advanced knowledge among certain KAITO token stakers. Blockchain analysts observed that over 1 million KAITO tokens were scheduled for unstaking on Friday, March 14—a volume 20 to 30 times higher than typical daily unstaking activity. Given that the unstaking process for KAITO requires a seven-day waiting period, some analysts, including those cited by crypto media, suggested this unusual movement could indicate that certain participants received early information about the impending API ban before the public announcement. These allegations, while unproven, underscore the opacity and regulatory challenges persistent in decentralized finance ecosystems.

The Broader Context of AI-Generated Content Moderation

X’s crackdown occurs within a wider industry struggle against proliferating AI-generated content. Major platforms like Facebook, YouTube, and Reddit are all grappling with how to manage the volume and quality of material produced by increasingly sophisticated large language models and image generators. The term ‘AI slop’ has gained traction among tech commentators and users to describe low-effort, often misleading or nonsensical content created solely for engagement farming or monetization. X’s move specifically ties this content quality issue to direct financial incentives, positing that removing the monetary reward will remove the incentive for bulk, automated posting. This policy reflects a growing prioritization of user experience and content authenticity over pure engagement metrics, a significant shift in social media philosophy.

• Platform Responsibility: Social networks are increasingly held accountable for the quality of discourse they host.
• Monetization vs. Quality: Direct financial rewards for posting can incentivize volume over value.
• API as a Control Point: Revoking API access is a powerful technical tool for platform governance.
• Ecosystem Risk: Third-party projects face existential risk when core platforms change rules.

Historical Precedents and Future Implications

This is not the first time a major platform’s policy change has devastated adjacent crypto economies. Similar disruptions have occurred when platforms like Facebook changed their advertising policies for crypto projects or when Apple and Google altered their app store guidelines regarding NFTs and wallets. The event sets a crucial precedent for other ‘socialfi’ and ‘infofi’ projects building on top of centralized social platforms. It forces a strategic reconsideration: should these projects seek greater decentralization to avoid single points of failure, or pursue deeper partnerships with platforms to align incentives? The incident also raises questions about the sustainability of token models primarily driven by speculative social engagement rather than tangible utility or revenue.

Conclusion

X’s devastating ban on applications that pay for posts, explicitly targeting ‘AI slop,’ has immediately crippled the reward programs of crypto platforms Kaito and Cookie DAO, resulting in severe token price declines and market uncertainty. The policy shift, enacted by X’s head of product Nikita Bier, underscores the escalating conflict between open monetization experiments and platform governance focused on content quality and user experience. While aimed at improving the social media environment, the move exposes the profound fragility of crypto-economic systems built atop the changing policies of centralized platforms. This event will likely accelerate trends toward more resilient, decentralized social media infrastructures and force a rigorous reevaluation of incentive mechanisms in the broader information finance landscape.

FAQs

Q1: What exactly did X ban?
X banned applications that use its API to reward users with cryptocurrency or other payments for making posts, a practice it linked to the proliferation of low-quality ‘AI slop’ and spam replies on its platform.

Q2: How did Kaito and Cookie DAO tokens react?
The KAITO token fell 17.7% to about $0.57, and the COOKIE token dropped 15.5% to approximately $0.038 within hours of the announcement, according to CoinGecko data.

Q3: What are ‘Yaps’ and ‘Snaps’?
Yaps was Kaito’s product that rewarded users for posting crypto content on X. Snaps was Cookie DAO’s similar product. Both distributed points, tokens, and airdrops to incentivize engagement.

Q4: Why is there suspicion of insider trading?
Analysts noted an unprecedented surge—20-30 times normal levels—in KAITO tokens scheduled for unstaking just after the ban. Since unstaking takes 7 days, it suggests some stakers may have initiated the process with advance knowledge.

Q5: What does this mean for other socialfi crypto projects?
This event highlights the major risk of building token economies dependent on a single centralized platform’s API and policies. It will likely push projects toward more decentralized architectures or diversified platform strategies.