InfoFi is dead: the cycle and dilemma of encryption marketing.

Author: Chilla Source: X, @chilla_ct Translator: Shan Oppa, Golden Finance

"InfoFi" was once a revolution. We have transitioned from an era of "non-disclosed KOL paid promotions" to an era of "project parties publicly incentivizing promotions." Yet now, it seems we have returned to the starting point, as influencers once again focus on non-disclosed promotions.

But haven't we found the perfect model? Too many people have figured out this trick, and although Kaito (a crypto information analysis company) or other competitors have upgraded their algorithms, it has become the most easily accessible "fruit" for those who want to make quick money by writing a few words.

But if we shift from "quality" to "quantity", it would be too mediocre. When this so-called "quality" actually existed is still a mystery.

On the contrary, what is changing is the way a crypto startup grows its users.

The current state of crypto marketing

If you want your brand/project to grow, who do you want to speak for you? Of course, those who:

• Respected by the community (Value recognition)
• Good Brand (Quality)
• Numerous fans (quantity)

However, cryptocurrency is a closed system that is completely different from Web2. The user base of Web2 is entirely different and expects specific types of marketing. In the crypto space, marketing and distribution are closely intertwined, almost merging into one.

Traditional marketing methods that follow the rules of the conventional market do not work here. The target audience is too niche, and "normal" marketing approaches are ineffective here.

In this industry, you can only trust a very small number of people. Moreover, they are not even real people, but rather anonymous accounts. You can't use Hollywood stars (FTX did try, and it wasn't bad), but we are not ready for that yet. We need some specific individuals we can trust.

Authority Principle

Have you heard of the "authority principle"? It is a human bias that "people are more likely to trust a celebrity, expert, or recognized person because they are considered credible, authoritative, or worthy of imitation." In short, this is how influencer marketing works.

Initially, apart from early Bitcoin enthusiasts, the industry was (almost) entirely made up of traders. Therefore, the KOLs of the 2017 cycle were mainly traders who showcased their strategies on Crypto Twitter (CT). Once they accumulated enough followers, exchanges began to collaborate with them for influencer marketing, as they had strong community appeal.

Subsequently, crypto Twitter (CT) continued to expand, leading to the emergence of vertical fields such as DeFi. As a result, the concept of KOL also broadened, including accounts that discuss specific sectors like DePIN, artificial intelligence, consumer applications, and so on. New startups began to look for the most loyal users from this "talent pool" to spread information through the most trusted accounts.

mixes up "marketing" and "incentives"

InfoFi has changed everything. Everyone has something to say. But it's no longer just for the sake of expression (no, in fact, it has never been like that for KOLs; they always have their own incentives, but at least initially, many just wanted to write down their thoughts on cryptocurrencies). Now, through external Kaito activities, keywords can be rewarded. Internal marketing cooperation agreements are no longer necessary.

Doesn't all of this sound wonderful? Speaking out on a topic can earn you rewards, just like in a fairy tale. You can make it onto @KaitoAI's leaderboard without needing a large fan base, which seems to lower the entry barrier.

But all of this has also led the company to confuse marketing with incentives.

In fact, if a few trusted individuals talk about something, they will encourage end users to give it a try. However, if many people without strong brand endorsements discuss something under the promise of rewards, it will, in most cases, have the completely opposite effect.

Kaito's activities are a waste of money (unless you know how to make use of it)

This is similar to the concept of airdrops. If your project already has good distribution channels, has achieved product-market fit (PMF), and has users, then airdropped tokens can serve as an external incentive to reward those things that already possess intrinsic value. However, if your project has nothing, this external incentive will be completely detached from the project itself and will instead lead to a faster demise of the project.

Similarly, most Kaito activities are usually those aimless projects that serve as the last line of defense after a marketing failure. They choose to exploit the most basic human instinct: to make quick money.

Moreover, like many airdrops, the end users have become the objects of the "airdrop" rather than the recipients of it. The quality of content has declined, while the quantity has increased, and the purpose of discussions is no longer for the community, but for Kaito's algorithm, in hopes of being recognized and rewarded by it. This creates a deadlock for small accounts that want to grow. It also hinders the reach of marketing, as a potential customer, I would not want to use a protocol that I see all accounts mentioning and then quickly forgetting.

The incentive mechanisms are not aligned. While some well-known projects with strong TVL (Total Value Locked) and a fan base have indeed leveraged the numerical advantage of these "chatty" tokens well, many new startups are realizing that, from a quality perspective, this is all unsustainable.

Unless in some special circumstances, its underlying logic is similar to airdrops.

becomes "CT Leader"

This may be the natural evolution of this "carnival". Why not absorb those external influencers into the company by granting them the identity of "CT leaders" to build loyalty? This is much better than doing a few promotions through Kaito or private cooperation agreements. This approach privatizes KOLs for growth purposes, bringing the company closer to crypto Twitter (CT), demonstrating stronger unity and long-term consistency.

A Review of Three Types of Crypto Influencer Marketing Strategies

1. Influencer Marketing (Private Collaboration)
2. Kaito Activity
3. CT Leader

The three marketing/growth methods are not mutually exclusive. A project can fully utilize all three methods to expand its influence. However, the key is to understand your audience and have a clear ultimate goal, while also identifying the marketing potential led by founders within the team.

Do you have a powerful product that is about to launch, with an experienced team but lacking social media influence? If so, a good move might be to outsource founder-led marketing efforts to prominent figures on Crypto Twitter (CT) to shape brand reputation and establish connections within the ecosystem. This is essentially what @monad is doing through @intern.

However, at the same time, if you aim to create momentum for a specific event (such as a TGE) or expand an existing audience, Kaito or KOL activities can be an option (although I personally don't prefer either of these methods). As mentioned earlier, these methods focus on quantity. They are only useful if the project itself already has a quality foundation and just needs more voices to convey it. Otherwise, these activities are not only useless but can also be counterproductive. Of course, unless you just want to generate hype and extract as much value as possible from the community.

Conclusion

There is nothing that is purely black or white; everything is vague and unclear. There is no magical formula for expanding a project's audience. What you can do is clearly understand the goals you want to achieve and be aware of the resources you already have. At the same time, always consider quality as a potential consensus.

This is why the concept of InfoFi itself is losing value. Because it needs to be integrated into a larger idea in order to reach the desired niche audience. You want to attract big whales, but you're conducting a Kaito event? Then I have some bad news for you. If you want retail investors to spread information through Kaito and don’t mind the potential misalignment of incentives? Then this is more like KOL marketing now.

Quality and quantity are entirely different. As long as you know which one you want to prioritize, that's enough.