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What is called “InfoFi” in crypto today used to be called SocialFi. The name’s changed, but does it make it any more investable than the graveyard of dead “Facebook on a blockchain” projects? 

— Donovan

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Cetus exploit triggers $200m TVL collapse on Sui:

Total value locked (TVL) for Sui’s largest DEX, Cetus, plummeted from over $280m to just $75m after an exploit drained liquidity. According to independent analysis, the attacker used spoofed tokens to exploit faulty liquidity math, adding near-zero value while removing large amounts of real assets like SUI and USDC.

The incident sparked a discussion on an X space including about DeFi security on Move-based chains. Mysten Labs co-founder and CPO Adeniyi Abiodun clarified: “It’s not a bug in Sui consensus, it’s not a bug in Move,” and emphasized the issue was isolated to Cetus’ smart contract logic.

Abiodun added that the eventual losses may be smaller than the TVL drained, because Sui’s design allows validators to lock funds. “From the $220 [million], at least $160 [million] has been frozen, at least,” he said. 

Multiple other Sui protocols responded swiftly. For instance, both Suilend and Navi temporarily paused borrowing, declaring that all funds in those protocols are safe and unaffected by the Cetus exploit.

This is the first major test of the premier MoveVM chain. Part of the core thesis for the Move smart contract language is its security relative to Solidity, as the MoveVM aims to reduce attack surfaces through formal resource control.

The precise cause of the exploit is under review by Cetus and Mysten Labs teams.

— Macauley Peterson

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What is InfoFi?

One of the longstanding complaints against Big Tech is that they “exploit” user data for their own profit.

In some sense, I guess that’s true. I’ve used Twitter for years, and was never paid a cent for giving up any information about my demographics and interests. 

But is that “exploitation?”

Sure, my data is valuable in hindsight. But billions of dollars in cloud infrastructure and data analytics had to be invested to turn it into something economically valuable that marketers want to buy.

InfoFi, short for “Information Finance,” is a niche sector in crypto looking to do something similar.

Is InfoFi an investable category? Consider Kaito, the leader in this space.

Kaito has two main products. Both of these products generate a substantial $33m in annualized revenue, based on Dune.

The first is its data analytics platform, offering structured, sentiment analysis of public information. This is packaged as a monthly $833 subscription service that is sold to traders, AI agent companies and funds whose businesses depend on accurate sentiment tracking.

The second is a B2B service for crypto companies doing marketing. Dozens of prominent projects use Kaito for this purpose today.

The rough idea is this: Companies want to do marketing. Rather than the traditional top-down way of sponsoring events, media or paid influencers, Kaito offers an alternative way to incentivize bottom-up and organic content marketing.

Anyone can register on Kaito, start tweeting about a listed project on Twitter and earn a share of these rewards. dYdX, for instance, is committing $50k a month in tokens for such a campaign with Kaito. 

The problem, of course, is that this opens the door to all manners of trolls and low-quality content.

That’s where Kaito’s proprietary AI tech comes in. It’s supposedly filtering out slop from genuinely thoughtful content. So if you’re just posting “gmdYdX” or “bullish dYdX,” you’ll likely qualify for almost no rewards.

In sum, what Kaito’s really doing is using the blockchain to place a market value on attention, clout, social capital or whatever you want to call it. Hence, “InfoFi.”

Based on partnerships with companies like Story, EigenLayer, Berachain and more, Kaito has helped distribute $72.3m to yappers (this excludes KAITO’s own airdrop).

The KAITO token isn’t simply a governance token either. The token can be staked for an 11% APY, and the team has committed to buybacks — about $3.9m cumulatively so far.

At a circulating market cap of $502m today, KAITO is trading at a ~15.8 P/S ratio. If you’re willing to comps KAITO to traditional SaaS companies (~20x), then it suggests KAITO is undervalued.

The tricky thing, of course, is that no one really knows what the “right” multiples are for a crypto company, let alone one in a niche subsector. 

I think Kaito is leveraging token incentives to do something genuinely innovative. It’s struck up partnerships with major crypto teams like EigenLayer, Berachain and more.

Its success has attracted a few emerging competitors. One of them is Cookie DAO, a data analytics platform that rose to prominence during the AI token craze earlier this year. As far as I can tell, Cookies DAO is doing something almost identical. Instead of yaps, you have snaps. Instead of yappers, they’re called snappers. You get the idea.

This brings into question how strong Kaito’s moat is. 

Anyone can scrape public social media data. Switching costs are also fairly low. In theory, it’d be easy for Kaito’s clients to switch to another sentiment analysis platform.

Where its edge lies, I think, are in its AI tools, and how well it scores user-generated content and filters for high-quality content. That’s crucial because it determines what kind of marketing is rewarded, which in turn determines continued usage. 

The devil’s in the details.

— Donovan Choy

Nillion’s Monad Integration is poised to catalyze the next phase of DeSci’s evolution by eliminating key privacy bottlenecks. This synergy allows researchers, institutions, and DAOs to exchange sensitive data and insights securely while managing governance and payments onchain. Although early-stage, this integration may usher in the beginning of broader DeSci adoption, potentially transforming how critical research is funded, executed, and commercialized.

Derive-Synthetix merger called off

The proposed $27m token-swap merger between Synthetix and Derive has been canceled, with both SIP-415 and the corresponding Derive Improvement Proposal withdrawn following sustained community pushback. Both teams cited valuation concerns and lack of stakeholder alignment as core reasons for the reversal.

Derive’s co-founder, known as Nick, noted that the deal “doesn’t make commercial sense for the Derive community.” Meanwhile, Synthetix acknowledged that “the desired stakeholder and community support did not materialize.” Derive emphasized that it will remain independent and pursue planned product upgrades, including Derive Pro and improved margining. The onchain options market remains relatively virgin territory, and Derive hopes to capitalize on structural tailwinds following Coinbase’s $2.9b Deribit acquisition.

As flagged in our initial coverage of the merger proposal, the token-swap ratio (27 DRV:1 SNX) and modest $27m valuation were the primary sources of opposition to the deal. These ultimately proved fatal: The token-swap ratio drew pushback from both sides, and neither community coalesced behind the marriage. 

While both teams walk away with mutual respect, for now, they’ll build separately.

— Macauley Peterson