Author: Nianqing, ChainCatcher

Have you noticed that many KOLs have started to Yap while scrolling through X these days? What are they all Yapping about?

Yaps is a points system launched by Kaito, an AI-driven crypto data analysis and social incentive platform. X users can earn Yap points by posting high-quality crypto content (tweets, interactions). Recently, Berachain airdropped to Yappers, and today Kaito announced that the first 1,000 ANIME (the Anime token under Azuki) Yappers and Kaito Genesis NFT holders can claim ANIME tokens. Coupled with collaborations from multiple projects like Story Protocol, Movement Labs, and MegaETH, the expectation that "projects on Yap Kaito can receive airdrops" has once again heightened Kaito's popularity.

Similar to the previous rise of the Web3 social flywheel, KOLs and influential figures with existing clout thrive in the Yaps points system. They tirelessly produce articles on X and form matrices with other ICT (Inner Crypto Twitter) members. The benefit is that discussions about crypto and popular projects have increased, but foreseeable downsides are also gradually emerging, such as the proliferation of low-quality content, excessive interactions causing harassment for KOLs, and deeper issues like influence monopolization. Kaito has recently announced the upcoming launch of a Shadow Ban to improve the current chaos through technical means. However, controversies and doubts continue.

In 2024, fundamental analysis faces a complete collapse in the crypto field, and the current market increasingly validates the saying, "Attention in crypto is everything." If memes are a result of the attention economy, then Kaito is more like an upstream business of the attention economy, focusing on how to manage and allocate attention. But the essence of the attention economy is simply the next better thing. As a product of this era, can Kaito overcome short-term behaviors and become a sustainable, practically useful product?

This article will provide a detailed analysis of Kaito. Due to the existence of Yap, there are many (inflated) articles about Kaito on X, but I still recommend you read this article.

What is Kaito?

Kaito is an AI-driven crypto data analysis and social incentive platform. According to the RootData page, Kaito completed two rounds of financing in 2023, raising $5.3 million in seed funding and $5.5 million in Series A funding, with investors including Superscrypt, Spartan, Dragonfly, Sequoia China, and Jane Street.

Founder and CEO Yu Hu graduated from the University of Cambridge and previously worked at traditional financial companies like Citadel and Deutsche Bank. In a recent podcast, Yu Hu revealed that he grew up in China, studied in the UK, and later started businesses in the US and Singapore. Yu Hu is not a tech geek; he is very skilled in trading and believes that trading is the closest way to the market. He also mentioned in the podcast that Kaito will achieve profitability in June 2024 and has seen over a hundredfold growth in the past year.

Its core functions include:

1. Crypto Social Data Analysis: By scraping social data (such as interactions, follower graphs, content dissemination) from public platforms like Twitter (X), Kaito builds a KOL influence scoring model to provide quantitative marketing decision support for projects. Currently, some of Kaito's features are paid, with the official website showing that the annual subscription price for Kaito Pro is $833/month, and the monthly price is $1,099/month. Why is the pricing so high? Simply put, the cost of using the commercial API of the X platform is very high, and regulatory restrictions on usage limits have led Kaito to raise prices to limit user access, ultimately choosing a B2B model.

Related Reading: “In-depth Analysis of Kaito: How the Yap Activity Ignited the Social Flywheel?”

2. Yaps Points System: Users earn Yap points by posting high-quality crypto content (tweets, interactions), which may be redeemable for tokens or other incentives (such as airdrops, project rewards) in the future. Kaito officially emphasizes that to prevent manipulation and witch-hunting, earning Yap points is not easy and does not rely on quantity. The total amount of Yaps distributed daily is only 25,000, but the total user base has already exceeded 250,000 (as of January), making its scarcity evident. As the user base rapidly increases, the difficulty of earning Yap points has multiplied, making it highly competitive.

The algorithmic mechanism of Yaps ensures that KOLs and influential figures in the core influence circle will "grow stronger," while novice users will find it challenging to earn Yap points in the short term. This is because the evaluation mechanism relies on reputation-weighted influence rather than raw impressions or participation. Therefore, if the cumulative qualified social engagement of a tweet does not reach a specific threshold, points may not be awarded.

The core principles for awarding Yap points are:

- Quality > Quantity: Junk content (repetitive, lacking analysis) will be filtered out by the system, resulting in zero points.

- Hotspot Orientation: Provide in-depth analysis around projects recommended on the Kaito panel (such as Berachain, Monad, Xion).

- High-Quality Interaction: Interacting with influential figures about the content of the tweet (comments, likes) is more efficient than simply posting.

In summary, only content that is hot, high-quality, valuable, and can genuinely spark discussions in the crypto industry has a chance to earn points. Additionally, bringing in new users will also earn points, but the condition for earning points is that the new users must earn Yap points.

3. KOL Scoring and Leaderboard: Kaito dynamically ranks KOLs based on AI algorithms, forming a "Yapper Leaderboard," which serves as a reference standard for projects to select collaboration partners.

One of Kaito's strengths is filtering out smart followers from potentially inflated follower lists on the X platform, reducing the interference of fake accounts. This feature has strong commercialization potential, significantly addressing the pain points of KOL marketing by providing quantitative standards through its own AI scoring mechanism. The leaderboard based on Yap points connects high-scoring users with project needs, forming an "influence-as-a-service" model, where projects can purchase the "influence" of top-ranked users, making it more transparent compared to traditional KOL payments.

4. Yapper Launchpad: Yapper Launchpad is a platform launched by Kaito in January, aimed at determining the next Yapper leaderboard launch project through community voting. The Launchpad targets projects that have not yet issued tokens, allowing users to participate in voting through Yaps, smart followers, and upcoming on-chain assets to decide which projects will be included in the leaderboard. Users can earn points by engaging with these listed projects.

Kaito's Explosive Growth and the Attention Economy

In 2024, fundamental analysis faces a complete collapse in the crypto field, and the current market increasingly validates the saying, "Attention in crypto is everything."

If memes are a result of the attention economy, then Kaito is more like an upstream business of the attention economy, focusing on how to manage and allocate attention.

We can specifically categorize participants in the attention economy into:

Attention creators

Attention consumers

Attention distributors

Strictly speaking, Kaito is not a simple crypto data analysis platform; it plays more of a role as an attention distributor, aiming to create a better network for efficiently allocating information, attention, and capital. Kaito's founder, Yu Hu, has also made two judgments: 1. Personal brands will become increasingly important in the attention economy era; 2. In the AI era, people will place greater emphasis on connections between individuals.

Yap is the tokenization of this "attention," and the Yap to Earn model aligns with the strong demand for traffic and community participation in the crypto industry. This is also the biggest difference between Kaito and Friend.tech's "direct monetization of influence," as Kaito's definition of influence is more refined and sufficiently unitized. As mentioned earlier, the scarcity of Yap points set at the beginning directly determines the influence of content in this space.

Of course, Kaito's explosive growth is also inseparable from the wealth effect, and more critically, the events constituting Kaito's wealth effect are not one-time or short-term behaviors. As a platform for launching influence, Kaito's mechanism can significantly help early-stage, unlaunched projects expand consensus. Recently, Berachain airdropped to Kaito Yappers, and well-known projects like Story Protocol, Movement Labs, Eclipse, and MegaETH have launched on Kaito's platform, promising to include Yap points in airdrop or incentive plans, thus attracting more users.

Additionally, the valuation of Yap points has been assigned a higher value due to their scarcity and difficulty of acquisition. Kaito does not solely use its own tokens to reward creators. By participating in its ecosystem, users can also farm multiple airdrop rewards from top projects.

But the essence of the attention economy is "the next better thing," and Kaito may also be unable to escape its fate

The other side of the wealth effect is speculation. The Yap competition from Kaito indeed provides creative motivation for creators and content producers, but it has also led to a proliferation of low-quality content. Many KOLs have complained that the Twitter feed has been polluted by Yap, even claiming, "I block one as soon as I see one." Although Kaito is about to launch a Shadow Ban to limit low-quality content, I believe Kaito should focus more on community education, continuously emphasizing the rules of Yap.

Additionally, the algorithm of Kaito Yap operates as a black box; although there are scoring standards, they are very vague. Furthermore, the current algorithm is clearly biased towards KOLs, as the measurement mechanism for Smart Followers exists, monopolizing the majority of Yap points within the core influence circle, making it extremely difficult for novice users to earn any points. @唐华斑竹 once commented that Kaito is not a credible evaluation system for Twitter X; at best, it is merely a platform for KOLs to exploit. The so-called filtering of quality content has essentially turned into "if you want to earn points, you must continuously promote the popular projects on Kaito." This has led to an excessive concentration of chips in the hands of top Yappers.

Yu Hu mentioned in an interview that his goal is to financialize everything through Kaito, allowing market forces to decide, such as users voting on which projects to launch on the Launchpad. But are market forces always correct?

KOL @小熊饼干.eth believes that Kaito's popularity will wane. He pointed out that the voting mechanism for Kaito projects has gradually evolved into a queue system for launching, which lacks the incentive for "bribery" in the absence of a survival of the fittest scenario, leading to a decline in the attention of Yap players towards Kaito Launchpad projects. Coupled with the fact that the current algorithm is unfriendly to retail investors, Kaito's long-term development may lack momentum.

The attention economy is inherently a short-term behavior. Historical precedents tell us that once the support of fundamentals is lost, the narrative of the crypto market completely devolves into "the next better thing." Kaito may become a sustainable business model, but its true significance to the crypto market is whether it aids in short-term speculation or promotes greater interaction and consensus within the crypto market. As the wealth effect diminishes and attention shifts, how should Kaito avoid following the old path of Friend.Tech and other Web3 social platforms?

Kaito's founder, Yu Hu, has a grand ideal; he hopes that the ultimate goal of Kaito is for users to forget the existence of the Yaps system, making the output of opinions a habit. Perhaps this is where the true value of a product lies.

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