Let's start with some basics.

What is InfoFi?

A simple google search returns this: InfoFi, short for "Information Finance," is a Web3-native financial model where information, data credibility, prediction signals, and user attention are tokenized and monetized.

What does this mean in simple terms?

This means that Web3 information is rewarded based on its quality and marketability.

What is SocialFi?

Again, a google search returns this: SocialFi, short for Social Finance, is a concept that combines social media and decentralized finance (DeFi) principles. It aims to provide a decentralized approach to social media platforms, empowering content creators, influencers, and participants by giving them control over their data, freedom of speech, and the potential to receive compensation for their social media engagement.

What does this mean, again, in simple terms?

This means that anyone who creates and publishes “content” (more on this later) on social media platforms is rewarded based on their originality, “mindshare”, and relevance.

What is Kaito?

Kaito started out as a Web3 information platform that sources Web3 information from thousands of sources and provides users with a simple way to track mindshare and attention on any token, topic or story. The “Yap to earn” program combines elements of both InfoFi and SocialFi, by incentivizing people i.e. yappers to talk about any specific Crypto project or in general about the industry, in return for Yaps or leaderboard ranks or airdrops from projects based on the quality of content and engagement. In simple terms, it is a marketing platform that Crypto projects can use to publicize or capture mindshare in the industry through incentives.

Some background to the name “Kaito” from Yu Hu (founder of Kaito):

a) our early engineers were anime fans, b) “AI” is in the name, c) Kaito means “sea” and “people” in Japanese - aligns with our mission of helping people navigate the sea of information.

What is “content” and how is it different from information?

I joined the Kaito Yap-to-earn program a few months ago and started yapping or talking about projects without thinking too much about which projects and what I am talking about because, hey, the yaps meant $KAITO airdrops right, but of late, I’ve been wondering: what is content?

AI slop:

Many have access to at least one $20 a month Gen AI tool subscription such as ChatGPT, Claude, Gemini etc. which can research a topic and give you “results” within minutes. This is what results in what is called “AI slop” on the timeline. As a yapper, while initially this did not bother me as I was doing it myself, of late, it has become nauseating as you see almost always the same “content” getting repeated in multiple different ways thanks to AI.

Let’s go back to Google again and ask it to define “Content” in the context of social media. Here’s what it throws up: “Social media content refers to the various types of posts, videos, photos, and articles shared across platforms like Facebook, Twitter, Instagram, and LinkedIn. It includes any form of information, media, or message created by users to engage, inform, or entertain their audience, such as text posts, images, videos, stories, and live broadcasts. This content plays a crucial role in digital marketing, as it helps connect with potential customers and build trust with existing ones.”

Once again, let’s simplify this. So, based on the social media platform, content is nothing but what you post, to “engage, inform, or entertain” your audience or in other words, to “gain attention”.

So, if you are using AI to generate content which many do and I did too until now, we are not really creating any original content but using artificially generated content and posting it without thinking too much with the sole intention of getting yaps or climbing a project’s leaderboard.

Is using AI to create content bad?

At this point, you may ask me, “OK, so are you saying this is bad?”. Absolutely not, if your intent is to make the most of your Crypto Twitter time and get airdrops from projects by talking about them without caring about what they really do or the means (using AI etc.) then you do you. However, keep in mind that originality will still be recognized and rewarded and AI generated content will be filtered.

A lot of people have started expressing that the timeline has started to feel forced and artificial. I've felt it too. This is not to say I will stop yapping. I am going to just pivot to talking about projects that genuinely interest me in my niche i.e. Crypto X AI or decentralized AI because a lot of work that I do in Web2 involves AI solutions.

What is the Kaito Yaps system?

Now, let me try and express my understanding of the Kaito Yaps system. Crypto projects need a way to market their product, whether it is a new L1 protocol or a L2 chain or a rollup as a service or any Blockchain Infra or an App, to retail or institutional users. Let’s say they have a USD $100K budget for marketing. What’s the most efficient way of spending this budget?

The traditional approach, before Kaito, is to spend it to hire a marketing agency that does all the heavy work, of creating marketing campaigns, creating videos, posts, articles, memes etc. to create a hype around the project, and maybe hire a few KOLs to talk about the project. In this approach, the “consumers” of all this marketing content feel a bit intimidated by all this jargon thrown at them, or indifferent or even left out because it is a one-way street of information.

Now imagine they outsource this whole marketing thing to Kaito and say, “run a yap to earn campaign for me and I’ll reward the top 100 yappers” and “oh hey, let me throw in a reward for Kaito stakers too” and now you have a whole lot of people trying to get on the leaderboard competing with one another to get these rewards.

The thing is, because this is gamified and everyone will think they have a chance of earning the rewards, you now have weaponized incentivized competition so your chances of ROI on your marketing budget has just drastically increased compared to the traditional approach because of the network multiplier effect and the participation of a lot more people who feel ‘included in the campaign.’

To summarize, Kaito is the attention distribution platform, KOLs are the attention creators, Yappers are both attention creators and distributors (by engaging with KOLs, they spread the reach of every post) and everyone else are attention consumers. Organic attention is people talking about Crypto in general or certain projects w/o any incentivization. Inorganic attention is people talking about projects because they are being incentivized to do so.

Now, what is broken in the current system in my view:

1) Problem: “AI-slop” is dominating and contaminating the CT timeline.

But what do you expect people to do when the only sources to know about a project are a whitepaper (if available), technical documentation, the official blog (again if available) and the project’s social media (X, Discord etc.). So, people just feed all this information to an AI application like ChatGPT and ask it to summarize, create a thread, post or article with some variations of it depending on their “creativity”. This results in “AI slop”.

Possible solution? Tightening the Kaito algorithm to penalize low quality effort or copy pasta, while addressing the symptoms of the problem, does not address the root cause.

What I suggest: a) Give people a gamified way to explore the project and learn something about it. Simplify the technical jargon and make it easy for anyone, even non-Crypto natives, to understand the project through interactive, immersive experiences and then talk about it. This way, each person’s experience becomes unique, and this will reflect in their perspective.

b) even better, conduct a Hackathon where people can create their own apps or AI agents or workflows that can interact with the project regardless of whether it is an Infra or App. Reward the top 10 or whatever top contestants. Now, this obviously depends on the nature of the project on what’s technically feasible and up to them to implement it but Kaito can enable this by providing them the launchpad/infrastructure for such Hackathons.

c) Create a Yap simulator. What is it? It is a simulator that can in real time generate how many yaps an original post can possibly receive based on its originality and uniqueness. This, I believe, will encourage people to be creative and thoughtful when creating content. I mean, why would people post something when they know it is not going to get them yaps? It might become too cumbersome to simulate for replies so at least for original yaps, this can be considered. Also, the final yaps obviously will also be based on smart follower engagement but letting people know upfront if the “content” they have created stands any chance of garnering yaps or not would be beneficial.

2) Problem: Inner-Circle members and Smart Followers have it ‘relatively easy’ while smaller accounts find it harder to earn Yaps.

The Kaito Yap system is designed this way. Why? In Yu Hu’s own words:

“Attention is the new currency, but not all attention is worth the same”.

Think about it from a project’s perspective: would you spend your marketing budget on a KOL or an emerging account or an unknown social media account with no reach? The answer is obvious.

Possible solution?

The only way small accounts can earn Yaps is by posting “high quality content” or by interacting with Smart followers and they interact back. However, both these approaches are based on other factors such as X’s own Grok algorithm and how it treats small accounts in terms of attention, engagement and visibility created.

What I suggest: a) Create a dedicated leaderboard for yappers with less than 100 Smart followers instead of lumping them into the “Emerging” yappers category with everyone > 1000 Smart Followers. This can be done for both the Kaito Yaps Leaderboard and the specific project Leaderboard and apply the same “high-quality, original content” filter to weed out spam and low-quality effort. This will encourage smaller accounts to try to be original and creative. If you are technical, post informative guides and if you are not, create memes or help community members navigate the project’s ecosystem.

b) Yu Hu says "Aggregated Yaps at an account level translates to Tokenized Influence” so if let’s say I have 25 Yaps as a small account, at a zoomed-out level, it may appear a small blip at an Influence level, but it is too small to make a difference. KOLs can be tracked based on Influence while smaller accounts can be assessed based on originality. While attention may be the new currency in Crypto, the “purchasing power” of that currency should be based on its quality of economics, not just on its reputation or supply quantity. For example, you cannot compare the US dollar to the Iranian rial, can you (1 USD = 42125 Iranian Rial as of today)?

c) reward content not just based on engagement from Smart Followers / Inner Circle but based on engagement from anyone outside Crypto Twitter too as long as the discussion stays relevant and adds to the overall quality of what’s being discussed.

3) Problem: Attention farming

The whole Kaito Social Graph is about who’s connected to whom in terms of Smart followers, but we see a lot of KOLs reply to each other’s posts thereby doing a version of “I scratch your back, and you scratch mine”. While Kaito says it considers “Coordinated group farming i.e. Organized, tight-knit groups posting or engaging in sync to artificially inflate Mindshare” as a malicious activity and penalizes it, in reality, honestly, this may not be effective in its implementation or be a bit ‘lenient’ towards certain KOLs whose ‘intent’ may not be to group farm or who are considered to be non-malicious actors. Also, KOLs wield engagement with smaller accounts as a weapon when they preferentially and completely upon their discretion, choose to engage with some accounts over others and when to, when not to.

Possible solution? Disengage or decouple smart followers’ engagement from earning Yaps for smaller accounts and assess “Yap worthiness” based on originality, insightfulness, uniqueness of replies. Incentivize quality engagement from Smart followers and penalize blatant attempts to boost yaps of followers or engaging in preferential treatment.

4) Problem: KOLs monopolize multiple projects intentionally or otherwise leaving smaller accounts and other content creators from gaining any mindshare.

Possible solution? While Slashing has been introduced, even a lot of KOLs have been complaining about the execution of this and even a casual mention from them about a project gets them on the project’s leaderboard.

What I suggest: Kaito should be completely transparent about how many projects can big KOLs accounts yap about and likewise for smaller accounts so people will put in the effort to really pick and choose the projects they have high conviction on and want to yap about. Also, give less weightage to KOLs casually dropping names of projects versus consistently talking about them.

5) Problem: Kaito airdrop farmers and yappers talk about a project until TGE and then claim, dump the tokens to move on to the next shiny object. There is also the problem of bots farming attention or auto generating “content” and fake, multiple accounts or Sybilling.

Possible solution? Some projects reward token stakers after TGE with future emissions but the impermanent loss and uncertainty around a project’s ability to deliver means that many look for the first opportunity to sell. Also, while Kaito does have algorithmic ways to detect “fake or bot accounts” intended to maliciously manipulate engagement metrics, these are again linked to only Yapping / social media engagement or offline behaviour.

What I suggest:

a) to address the first problem, instead of rewarding token stakers with the same native tokens as rewards, provide an option to stake the native tokens pegged to $KAITO and reward the stakers with a combination of $KAITO and the native token or even just $KAITO and additionally incentivize stakers with a proportionately increased allocation in future sKaito airdrops, something similar to $VIRTUAL ecosystem and its Genesis launches. This will also ensure that projects seamlessly transition from pre-TGE to post-TGE in the Kaito ecosystem while continuing to gain from and generate value to Kaito and its yappers.

b) to address the second problem of bots, in addition to algorithmic detection, also make it mandatory for Onchain behaviour to back up your social media yapping. In other words, walk your talk by actually using a product or protocol and restrict the number of wallets per chain that can be connected to the Kaito account using X. Reward only those accounts and wallets who demonstrate onchain behaviour aligned with their Yapping.

6) Problem: Projects customizing their own algorithm on how Yap points are calculated for their leaderboards and all the Kaito principles getting defeated based on how individual projects implement their own algorithm based on the Kaito base model.

So, if a project decides to reward low quality effort or even memes because it is only interested in getting as much attention as possible or create “vibes” arounds its community, then the AI slop and everything else will continue to prevail.

What I suggest: This is a tricky one as Kaito would want to not be too stringent or prescriptive to projects on what content they should or should not reward as it is, well, the project’s marketing budget and they can do whatever they want with it. However, again transparency on how a particular project’s leaderboard is being calculated or what factors the project is looking for in content on it would help creators customize content based on the project or even choose to skip a project if it is not in line with their operating principles and personal branding.

Future of Kaito:

Yu Hu has reportedly spoken about the following as the future of Kaito:

1) Market formation: trade mindshare, trade narratives, expressing unique, humanized views/perspectives, unlocking market premises etc.

2) Capital formation: the social capital is already getting formed or strengthened through Kaito Yaps. Financial capital formation will become a natural outcome of market formation. Also, Yappers get to decide which project to distribute attention to. It’s like a DAO where market participants get to decide which projects have Yapper leaderboards created for them and which don’t. Combine this with social capital and focused liquidity, then you get this (possibly, but a bit oversimplified):

Social Capital + Market formation + Liquidity = Capital formation.

The ability to drive capital and liquidity to where attention is converging or extending that further, the ability to direct capital to new narratives.

3) Web3 search engine: The probable end game (for now) is to become the Google for Web3. (I hope the Google references at the beginning of this article make sense now).

Other things that I have an issue that may come up in the future for which I don’t have anything to suggest and frankly, with Kaito leading the InfoFi + SocialFi space, it may be difficult for anyone to predict how things will turn out are:

1) Market formation: why would I want to trade someone else’s social capital or influence? A lot of Crypto tokens don’t have any fundamentals already and are purely driven by attention, vibes and momentum. Now we want to trade people’s opinions? What’s the value in that? Even if retail Crypto traders are interested in trading or betting on the direction a particular token or narrative will take based on its attention at any given time, why would institutional investors want to do that?

2) Capital formation: Yu Hu references Polymarket as an example of how the market determines what could be the most likely outcome of an event because there is a financial incentive to it. Currently the Yaps system is leaning towards the Demand side i.e. the projects who want to use Kaito Platform to market their projects because that’s what makes the whole yapping system valuable. However, with the market and capital formation being envisioned, this will tilt the scales towards the supply side i.e. the yappers. Hurray, more power to the yappers but what would be the incentive for projects to use Kaito dashboard if it is not in their control whether they get listed as a Leaderboard project or not?

3) Becoming the Google of Web3 and beyond: Yu Hu’s vision is for Kaito to leave a legacy of a network that extends and expands beyond Twitter to other social media platforms and even beyond Crypto to other industries by creating a network based on Social Capital, Market dynamics and financial capital drive narratives and liquidity and further beyond to becoming a search engine that’s based on indexing all the above parameters for people to know what financial markets are up to. For Kaito to become that and become a verb like ‘Googling’ and people to make financial decisions based on Kaitoing search results, the scale of development and execution effort required is similar to what it took to build Google. Now, Kaito has "crossed the chasm" and become the market leaders. Will they become as successful as Google or even surpass it, or they get acquired by Google, remains to be seen.

Hats off to Yu Hu (@Punk9277) for having the vision to even conceptualize such as a product and bring it to where it stands today. I hope he can fulfil his intended vision and scale Kaito to greater heights.

Reference: This excellent ~2.5 hours interview that @KevinWSHPod did with Yu Hu. I watched every minute of it and it was worth it.

MR SHIFT 🦁

@KevinWSHPod

E105: @_kaitoai : Why the next 100X in crypto will come from Yapping!

@Punk9277 is the Founder of Kaito AI, the distribution centre of crypto, for information, attention and capital - powered by AI.

Timestamps
0:00 Intro
2:47 Who is Yu Hu ?
4:05 Why Yu became more public
5:24

1,263

8:57 PM • Jan 17, 2025

P.S: It would have been extremely ironic to have written an article touching upon AI slop, using AI, so I am very glad to say that, except for a few Google searches, no AI was harmed in the writing of this article. I wrote this completely organically and in the old-fashioned way.