Table of Contents
Researcher
Related Projects
Key Takeaways
Kaito initially launched as an AI-powered research tool but soon identified fundamental inefficiencies in how information and attention flow within the crypto market. The team recognized that projects needed more than just traditional KOL marketing; they required mechanisms to promote high-quality research and distribute airdrops and rewards more effectively. In response, Kaito expanded its business model into an InfoFi network, launching the Yaps system, Yapper Leaderboard, and Kaito Connect on December 11, 2024.
This strategic pivot proved successful. Yaps quickly became a core component of project incentive structures, enabling traders, analysts, and market participants to earn rewards based on content quality. These rewards were then used within Kaito Connect, creating a market-driven voting mechanism.
Yaps emerged as a crucial on-chain metric for reputation and influence. Projects are likely to continue using Yapper Leaderboard rankings as a benchmark for airdrop distribution, reinforcing Yaps as both a measure of individual market influence and a key driver of sustained economic value within the Kaito network.
However, the value proposition of $KAITO remains unclear. While the whitepaper outlines its functions in network governance, as a network currency, and as a tool for influencing the distribution of attention within the Kaito ecosystem, it is uncertain whether these features will generate sustained market demand. In particular, the staking multiplier for voting power must be carefully designed to ensure it does not compromise the fairness of the system.
That said, it may be too early to fully assess $KAITO’s long-term value. The token has been live for only a day, and it will be crucial to monitor how the governance portal and other interesting use cases unfold in the coming months.
On December 11, 2024, Kaito launched the Yaps system, alongside the Yapper Leaderboard and Kaito Connect. Individuals became highly active on CT to earn Yaps, while projects competed for a spot on the pre-TGE leaderboard through Kaito Connect. As Kaito’s Yaps data emerged as a key metric for measuring influence on CT, both projects and individuals found themselves navigating an environment shaped by Kaito’s evaluation framework. Over time, Kaito solidified its position as a core information infrastructure in the crypto market, effectively shaping the flow of information and attention.
However, on February 21, 2025, Kaito published its whitepaper and introduced $KAITO, raising a fundamental question: Did Kaito as a product ever need a token? What value does $KAITO, and could the token launch potentially dilute Kaito’s original mission and product differentiation?
This article seeks to answer these questions.
1. Background - From AI-Powered Research Tool to An InfoFi Network
Founded in 2022, Kaito initially started as an AI-driven research tool. At the time, the crypto market was highly fragmented, with critical information scattered across platforms like X, Discord, and Telegram, making it difficult for investors to find reliable insights. Traditional Web2 search engines failed to capture crypto’s real-time nature and contextual nuances, and there was no integrated solution that combined on-chain and off-chain data. To address this problem, Kaito developed an AI-powered search engine that marked its entry into the market.
Kaito’s initial target users were institutional investors and research firms. Yu Hu, a former Citadel portfolio manager, sought to adapt traditional finance’s information access models to crypto. The platform aggregated data from X, Discord, media sources, governance forums, and on-chain transactions to create a comprehensive intelligence system. However, as Kaito observed market behavior more closely, it became evident that information in crypto is not merely data-it is an economic asset directly tied to attention. Unlike in traditional markets, narratives dictate price movements in crypto. Factors such as how frequently a project is mentioned on Twitter and which influencers discuss it significantly influence market direction.
However, Kaito also discovered a fundamental issue: the flow of information and attention in crypto is inherently distorted. The primary culprit was Web2 platform algorithms and how they evaluate content. X prioritizes content based on engagement metrics (likes, retweets, comments), making it easy for sensational or polarizing content to spread while burying high-value insights in noise.
Beyond platform algorithms, KOL marketing in crypto was also inefficient and opaque. Deals between projects and influencers were often conducted privately, without transparent metrics to assess influence or marketing effectiveness. As a result, projects had no reliable way to measure the impact of marketing campaigns on investor behavior, leading to ineffective spending and misallocated resources.
Moreover, crypto’s over-reliance on Web2 platforms (X, Discord, Telegram) created additional risks. These platforms control information flows through algorithm updates, content moderation, and shadow banning, limiting open access to critical insights.
As Kaito continued to refine its AI-powered search engine, it recognized a growing demand among projects for a new marketing model-one that incentivized high-quality research and facilitated more efficient distribution of airdrops and rewards.
As a result, Kaito expanded its business model beyond an AI search engine to establish an InfoFi network-a system designed to reshape how information flows in crypto. On December 11, 2024, Kaito introduced the Yaps system, Yapper Leaderboard, and Kaito Connect, laying the foundation for a new paradigm in crypto’s attention economy.
The core design of Kaito’s InfoFi model is as follows:
Stake-to-Rank: Moving beyond traditional engagement-based rankings (likes, retweets, comments), Kaito introduced a stake-based system where users stake Yaps to assess the value of content and projects. This decentralized content validation model ensures that decisions about “what information matters” are made by the market participants themselves, rather than centralized algorithms. For example, Kaito Connect uses Yaps as voting power, allowing users to evaluate the influence and relevance of projects and individuals in the crypto ecosystem.
Decentralized Attention Market: To replace inefficient and opaque KOL marketing models, Kaito introduced a transparent reward distribution system where projects allocate incentives fairly, and market participants identify and elevate valuable insights. The Yapper Leaderboard served as the first large-scale implementation of this concept, publicly ranking projects and individuals based on real market traction.
Verifiable Reputation System: Designed to reward analysts, researchers, and traders who consistently contribute valuable insights to the market. Instead of relying on crude social media metrics like follower counts, Kaito’s AI-driven evaluation system quantitatively measures genuine contributions. This system moves beyond popularity contests and fosters a trust-based reputation model.
Fast forward to today, Kaito’s strategic pivot proved successful. Yaps became a core component of project incentive structures, with traders, analysts, and market participants earning Yaps rewards based on content quality. These rewards, in turn, were used for voting and governance within Kaito’s launchpad ecosystem.
2. Takeaway - Does Kaito Need $KAITO?
There is still debate over whether Kaito’s Yaps system has made CT into a more efficient information-sharing hub or simply degenerated into a Yaps farming arena However, that discussion requires a separate analysis and is beyond the scope of this article. Instead, the focus here is to clearly differentiate the roles of Yaps and $KAITO and evaluate their respective economic value propositions.
Kaito’s product design is fundamentally built on network effects. It has successfully positioned Yaps as a critical component for both individuals and projects, creating a competitive framework that incentivizes continuous participation. This model has introduced a novel incentive structure for information flow in crypto markets.
Within this system, Yaps are not just points; they function as a Proof-of-Attention. Content creators on CT must actively contribute valuable insights to earn Yaps. Unlike conventional engagement-based rewards, Yaps cannot simply be farmed - they are a scarce resource that serves as a key on-chain reputation and influence metric. As a result, projects are likely to continue distributing airdrops to top-ranked individuals on the Yapper Leaderboard. This dynamic positions Yaps as a tangible measure of influence in crypto markets while simultaneously driving sustained economic value within Kaito’s ecosystem.
2.1 $KAITO’s Unclear Value Proposition
In contrast, $KAITO finds itself in a more complex position. The typical justifications for launching a token include decentralizing decision-making through governance, distributing rewards to incentivize participation, and encouraging broader engagement in the network. However, these arguments justify the existence of a token rather than guaranteeing sustainable market demand.
The $KAITO whitepaper outlines three primary functions: influencing attention distribution within the InfoFi network, acting as a medium of exchange within the Kaito ecosystem, and facilitating governance participation. Among these, the most critical concept is “Driving Market Forces.”
The whitepaper states that $KAITO holders shape attention allocation within the AI-powered InfoFi ecosystem, but the specific mechanisms behind this process remain vague.
”$KAITO holders actively participate in shaping the network by influencing the distribution of attention within the AI-powered InfoFi ecosystem.”
At this stage, one possible interpretation is that staking $KAITO provides users with greater influence across Kaito’s services. However, the whitepaper does not provide explicit confirmation. That said, the live platform currently states,
“Stake $KAITO to boost voting power and receive rewards.”
This suggests that staking $KAITO may increase the multiplier on Yaps voting power, allowing individuals or projects holding a significant amount of $KAITO to exert greater influence over market mindshare.
2.2 Potential Risks & Opportunities
For this model to be sustainable, the voting multiplier must be carefully calibrated. If $KAITO-staked influence becomes too powerful, it could enable wealthy individuals or projects to manipulate market mindshare simply by acquiring tokens. This would contradict Kaito’s core value proposition of fair information distribution and could ultimately undermine the integrity of the ecosystem. If left unchecked, such a mechanism could dilute Kaito’s long-term value and raise concerns over the legitimacy of attention-driven rankings.
That said, one way to strengthen $KAITO’s economic utility is by incorporating a revenue-sharing model. According to Kaito’s roadmap, a governance portal is scheduled for release in Q4 2025. This portal could enable $KAITO stakers to not only participate in ecosystem governance but also receive a portion of Kaito Pro’s revenue.
Source: Binance Research
2.3 Final Thoughts
Kaito has successfully built an ecosystem where information, attention, and capital are seamlessly interconnected. Given that few crypto projects have secured a paying customer base, Kaito’s achievement is particularly noteworthy. Yaps has effectively tokenized attention within CT, providing both projects and individuals with a direct incentive structure for quality content. This suggests that Yaps could become a critical marketing benchmark in the broader crypto market.
However, $KAITO’s value proposition remains ambiguous. While the whitepaper presents its utility in governance, as a network currency, and in influencing attention distribution, it remains unclear whether these functions will generate sustained market demand. More importantly, the staking multiplier for voting power must be designed carefully to prevent it from compromising the fairness of Kaito’s ecosystem.
That said, it may be too early to fully assess $KAITO’s long-term value. The token has been live for only a day, and it will be crucial to monitor how the governance portal and other interesting use cases unfold in the coming months.
3. Others’ Opinion
3.1 Steve from Four Pillars - "Long KAITO.AI, Short $KAITO"
Source: Kaito Docs
Since Ponyo has already well described the history and advantages of the product called Kaito, I will mainly focus on very negative opinions.
3.1.1 Airdrop Criteria Without Clear Standards and Public Transparency
Although Kaito is not a company directly related to blockchain (they still mainly provide off-chain data rather than on-chain data, and in fact, this token launch is their first direct use of blockchain), it's quite disappointing that they didn't pay attention to "Transparency" as a member of the blockchain industry. Some might argue that my criticism is too philosophical, but this is also a matter of fairness and equity.
While there are airdrop criteria in the tokenomics explanation, there was no clear explanation about why I received that specific amount when receiving the airdrop tokens. Moreover, while I received 8,000 $KAITO airdrops for Kaito NFT, seeing that others received 7,000 airdrops suggests that not only the airdrop criteria for YAPS but also the overall airdrop criteria are very ambiguous. Not only was the explanation of token utility unclear, but the criteria for how they distribute it was also unclear.
Well, they're smart people, so one might think they handled it well, but such ambiguous airdrop criteria could potentially be misused. With such unclear airdrop criteria, who could criticize if they gave more tokens to their friends? I don't think an airdrop with criteria that they cannot transparently disclose and people cannot understand can be considered a good airdrop.
3.1.2 That Infamous 'Alignment,' What the Hell is Alignment Anyway?
Source: Jesse’s Reply
Is there a term more ambiguous than "Kaito Value Alignment"? Who exactly can claim to be value-aligned with Kaito? While I have been highly critical of $KAITO token's distribution method and tokenomics design, I have maintained a very positive stance towards the YAPS system and Kaito-led InfoFI. Nevertheless, I received a smaller amount compared to my acquired YAPS, presumably because I have publicly criticized $KAITO.
Of course, one can't complain about how tokens are distributed since it's up to the distributor, but I've found the term "alignment" repulsive ever since watching Ethereum faction people push this strange word while demanding community loyalty to Ethereum alone. Blockchain inherently pursues an open ecosystem. Everyone is free to leave and enter. Top-down demands for alignment with a specific ecosystem don't seem particularly pleasant.
Why must they explicitly mention alignment? It's because they lack confidence in aligning people otherwise. Paradoxically, communities with genuine alignment neither emphasize nor force it. They can naturally get people to empathize with their values without doing so. This emphasis on alignment can actually create antipathy even among people like myself who have positive thoughts about InfoFi.
Without clearly explaining why one should buy tokens, why one should hold tokens, why one must stake tokens, etc., merely demanding alignment and disparaging those who sold tokens because they didn't know how to use them as "terrible" - if this is the 'alignment' they pursue, it's essentially close to fascism. In the long run, this kind of alignment will eat away at Kaito.
Above all, if they undervalue those who view their product critically and maintain a critical perspective, can we say that platform has potential for further growth? I'm not sure.
3.1.3 The Aesthetics of Speed, Being Fast Isn't Always Good
Source: Yu Hu’s Twitter
Kaito's founder Yu Hu made what amounted to a flex on Twitter, boasting that it took only 3 months from the YAPS concept to TGE (Token Generation Event), but well... I'm not certain this is something to brag about. People might not realize it now because they're immune to memecoin fever, but the decision to issue tokens should be made with extreme caution and responsibility. After all, when someone issues a token, people will buy it, and this process can potentially create victims. Someone will inevitably lose money. That's the inherent nature of tokens. Therefore, if someone is truly an excellent founder, they should consider the post-token issuance situation thoroughly and think hundreds or thousands of times about the various aftershocks that token issuance will bring.
However, it doesn't look particularly good to brag about doing this in just 3 months and doing it quickly. Did Yu Hu and the team really think deeply about issuing the token? I still believe that token launching should be carefully considered and reviewed from various angles. It's truly dangerous to think that because others are carelessly churning out tokens, we can do the same.
Even if we generously assume that launching the token quickly was "the right thing to do," rushing to launch a token in just 3 months still has many problems. As Ponyo mentioned earlier, even now after the token launch, crucial information is missing about how to use $KAITO and what distinguishes $KAITO from YAPS. What's the point of quickly launching and listing a token when the most fundamental information about the token is missing? How ridiculous is it to ask people to "have faith" in such a token? Asking people to believe in a token when they don't even know what it's used for? If this weren't Web3, it would simply be considered fraud.
3.1.4 $KAITO is no $HYPE (Still)
Source: Steve’s Twitter
I wrote this tweet on February 17th stating that $KAITO is not $HYPE.
In this article, I listed various reasons, which can be summarized as:
While Hyperliquid is improving a product that has already proven its Product-Market Fit (PMF), Kaito is taking on a new challenge
Kaito cannot be valued through peer valuation
The unclear reason for why one should hold the token (this remains an ongoing issue even after the TGE)
It's different in that people already have high expectations for Hyperliquid
And when the tokenomics was revealed, $KAITO was indeed very different from $HYPE. No, it was fundamentally different from its very essence.
Source: Kaito Doc
Obviously, not only was the period during which the community could use the product different from Hyperliquid's, but it was also different from Hyperliquid in that the allocation to investors and insiders amounted to nearly half of the total supply (whereas Hyperliquid will return more than half to the community). Honestly, I don't understand why so many people on Crypto Twitter compared Kaito's airdrop to Hyperliquid's, but in conclusion, Kaito failed to replicate even a tiny fraction of Hyperliquid's airdrop approach.
Is that bad? Not necessarily. This is because it's highly unlikely that any project will be able to match Hyperliquid's airdrop and token distribution strategy in the future. However, the point is that continuously comparing $KAITO to $HYPE to stimulate investment psychology is, strictly speaking, wrong and incorrect. This will continue to be the case. Kaito can never become Hyperliquid.
3.1.5 $KAITO, Are There No Legal Issues?
Source: Miles Jennings’ Twitter
Finally, although I wasn't aware of this aspect before, there's an opinion that if $KAITO is viewed as a token of Kaito, a centralized company, it could potentially be legally classified as a security. According to Miles Jennings, GC (General Counsel) of a16z, when centralized companies issue tokens as a means of fundraising, these tokens could potentially be considered "unregistered securities." This is because the main reason tokens were viewed differently from stocks was that tokens were considered to be directly related to blockchain rather than companies. However, if a centralized company (as I mentioned above, the Kaito product itself has no direct connection to blockchain since they are a product that brings off-chain data) issues tokens for fundraising, wouldn't this take on characteristics similar to stocks?
These concerns arise precisely because they rushed to mint and list the token without clear explanation of $KAITO's role. What is the relationship between $KAITO and the Kaito platform? Does Kaito plan to launch a separate chain? It seems impossible to view $KAITO purely positively while many questions remain unanswered.
3.1.6 $KAITO is dead, Long Live KAITO AI!
Will the $KAITO token do well? I'm not sure. Due to the reasons mentioned above, I hold a negative view of the Kaito token. However, since I maintain a very positive view of the Kaito product separately, I admittedly feel ambivalent when looking at Kaito.
When the era of InfoFi opens, research companies like ours might also glimpse new opportunities. New business opportunities could arise, and new revenue streams could be created. Therefore, I hope Kaito becomes a pioneer in the new sector of InfoFi, pioneering an unexplored market and ushering in a new era of content marketing. However, this doesn't justify the token issuance. Since they are a much more capable team than me, I believe they will do well.
