What is InfoFi? Why are so many people talking about it lately? Is it a good or bad thing for crypto, for social media, for the world? And how can you profit from it?
Like most things, the answer is nuanced. I’m going to answer the above questions, share my opinion on InfoFi as a whole, and then talk about how to make money from it including a list of 10 protocols worth keeping an eye on.
So what is InfoFi?
At its highest level, InfoFi is a concept that aims to add a financial (Fi) layer to information (Info). What we’re generally referring to in the crypto space when we talk about InfoFi though is using on-chain protocols and metrics to track and monitor information, and then injecting various forms of financializing (usually via tokens) into the mix.
To me, it’s another step in the financialization and tokenization of everything. Whether that is a good thing or not is well outside the scope here, but for better or worse, it all seems largely inevitable to me.
So what kind of information are we talking about here? Could be anything, really. Some of the more prominent and successful examples have been prediction markets (PolyMarket), reputation markets (Ethos), and protocols that track mindshare (Kaito).
For the sake of brevity, we’ll primarily focus on Kaito and other mindshare projects today as they make up the lion’s share of the current InfoFi market.
What is Kaito, what is Mindshare, what is a Yap?
In their own words:
Kaito is a next-generation web3 information platform that indexes a wide range of web3 content not easily accessible through traditional search engines. This includes sources like social media, governance forums, research, news, podcasts, conference transcripts, and more. By leveraging advanced AI technologies, Kaito redefines how users discover and interact with blockchain-related information.
In my own words:
Kaito is basically a data analytics platform that tracks a bunch of stuff that hasn’t easily been able to track before, most notably social media sentiment and mindshare. How many people are talking about certain projects or tickers? Which accounts are getting the greatest engagement? Etc.
It broadly helps to separate the signal from the noise and helps to identify the larps from the real ones. This is done by quantifying the previously un-quantifiable, and allocating a mindshare datapoint to everything — a metric that quantifies a project or brand or person or topic’s influence and visibility across Twitter.
Yaps are basically points, just like any other protocol giving out points for a potential future airdrop. You have to opt-in to earn yaps, and they are doled out based on how much mindshare you get each day. More on this soon as this is where the how-to-make-money part comes into play, as well as most of the controversy around all of this.
Is any of this perfect? No, far from it. Because Kaito uses AI and algorithms to help determine which accounts and topics are generating the most mindshare, it is constantly being gamed. Just like everything else these days. It’s a cat-and-mouse game where they are regularly updating their methods for calculating mindshare, but no, it is not perfect, and it will never be perfect.
But it’s still kinda cool? Personally, I love information, and I think it’s great to have new ways to track and quantify it.
Why are so many people talking about InfoFi lately?
Basically: $$$$$.
In late Feb, Kaito airdropped 10% of their total token supply to the community — largely to those who had accumulated Yap points. At current prices, that was an airdrop worth about $131,000,000. Yeah, that’ll get people to pay attention, and pay attention they did.
Aside from solidifying their place in the space with their airdrop, Kaito opened the floodgates for many other InfoFi projects to come along and begin their own point programs. They also leveraged their own mindshare and attention to work with non-InfoFi projects and allow them to allocate a % of their tokens to Kaito Yappers who specifically speak about their project, creating more of a mindshare-flywheel.
And herein begins the controversy. Add significant financial incentives to anything, and you’re going to invite all sorts of unintended consequences and in many cases, unwanted outcomes. As the GOAT said:
Initially it seemed like the community broadly enjoyed mindshare metrics, but lately there’s been a significant and noticable shift against the entirety of InfoFi. When you incentivize people to talk about projects, or to yap in general, you are going to get a lot of the same content spammed on the timeline. Literal stolen copy-paste posts, AI slop, low-effort garbage, engagement farming rage bait, etc etc.
Social media was bad enough when people were doing all of this just to get your like or comment or follow or whatever. Add additional and near-immediate and significant financial incentives on top of that? Yeah, of course it’s going to go downhill, fast.
So unsurprisingly, people are getting sick and fed up of the impact this is all having on the timeline. I made a tweet earlier asking what people liked and disliked about InfoFi, and broadly speaking, people all disliked it for the same reasons:
An exchange I saw earlier that pretty much sums it up for me:
No shade against Wale — I like Wale a lot, but this is a perfect example of seeing how the outcomes play out based on the incentives. You get people talking about something because the protocol is doling out tokens to people to talk about them, yet a lot of the talking about them is only about the fact that they’re giving out tokens to people talking about them.
Wale’s tweet isn’t bad, or unethical, or anything. It’s well written, it has a bunch of information in it, and it’s helpful to a lot of people. But Wale is one of the best at this. Imagine logging in and seeing 100 worse versions of this type of post, all day, every day.
And that is the main issue most people have with InfoFi.
On the flip side, InfoFi can and does reward genuine creators, and it can be especially beneficial for those who don’t have much (or any) capital to their name. Since all you need is an internet connection and a twitter account, just about anyone can get involved. The barrier to entry is extremely low. This is of course a double edged sword — it’s nice that it’s open and accessible, but being this way inherently leads to an abundance of slop content.
Is InfoFi good or bad for crypto, social media, and the world?
I’m intentionally asking a really bad and silly question here since there’s no way to answer it with a yes or no response. It’s like asking if crypto is good or bad for the world, or if social media is good or bad for the world, or if guns are good or bad for the world, or if industrialized farming is good or bad for the world.
These things exist, and these things are tools. In some ways they are good and beneficial and used as such; and the reverse is obviously true too. They have pros and cons. InfoFi is the same.
InfoFi has value. People are innovating and experimenting and building cool, new, and interesting things. An unfortunate side effect of the current incentive structure is that most people’s timelines are degrading (sidenote but never forget the power of muting and blocking, both individuals and words/phrases — you ultimately get to curate your own timeline).
Most sectors in crypto go through periods of wild speculation and mania and annoyance. This is no different. The nice thing is that the market is good at self correcting. As more people get sick and fed up, the incentives cease to be as effective, and projects need to adapt and adjust. We’re starting to see that happen already.
I don’t think InfoFi is going anywhere. It’ll ebb and flow just like everything else, and, hopefully, it’ll also improve over time. I think as the web increasingly becomes a life-like but life-less Dark Forest flooded with generative AI content, the importance of being able to identify and quantify human content will only grow in importance.
So how about actually making money from it?
Is it too late? (it isn’t)
Is it only for the big influencer accounts, or can anyone get involved? (any one can)
Can you do it without people hating you? (you can)
Do you need to invest money to get started? (you don’t)
I’ll answer these questions and more below, and share a bunch of protocols I have my eye on and that I think could have outsized rewards (especially for those who are early).
Making Money with InfoFi
Broadly speaking, there are 4 ways to make money via InfoFi:
