Why InfoFi

"Info finance is a discipline in which you (i) start with a fact you want to know and (ii) deliberately design a market to optimally elicit that information from market participants." — Vitalik Buterin, From Prediction Markets to Info Finance

The distribution of attention in today's market is, at best, inefficient, and, at worst, deeply unfair.

• Inefficiency

  • Social media often creates echo chambers which lead to a suboptimal distribution of attention.

  • Platform algorithms may be biased or imperfect.

  • Algorithm-based attention distribution could be inferior to other alternatives, such as market-based systems, which are closer to the source of truth.

• Unfairness

  • Creators receive only a small fraction of the value they generate directly from the platform.

  • Users drive the demand that fuels this economy but remain unrewarded for their time and engagement.

  • Platforms not only hoard the majority of the value but also dictate the flow of attention and value without accountability or transparency, due to a significant power imbalance (eg account suspensions could be made solely at the platform's discretion).

This is where InfoFi comes in: it allows market forces to determine where attention should flow. By introducing market forces, this approach has two major advantages:

• Efficiency: Market-based systems have proven to be more effective in bringing the world closer to the source of truth — case in point: Polymarket’s role in 2024 US Election.

• Decentralization & Fairness: Since market forces are driven by the collective actions of creators and users, this approach also reduces reliance on platform algorithms and facilitates a fairer, trustless redistribution of value across the entire network.

AI-Powered InfoFi

One of the struggles InfoFi has historically faced is the long-tail problem. While everyone can have a view on the outcome of the US elections, people find it much more difficult to form opinions on the majority of long-tail topics. For example, is Toyota more popular today than it was three months ago? How has sentiment toward Solana NFTs shifted in the past week?

AI, on the other hand, excels at solving long-tail problems. By tokenizing the hard-to-quantify, it provides valuable reference points that enable the formation of markets.

In fact, we believe AI-powered InfoFi is the endgame for information efficiency:

• Stage 1: Disorganized information (the past)

• Stage 2: AI-powered distribution (where we are today)

• Stage 3: AI-powered InfoFi / market-driven distribution (where we are headed）

What AI-Powered InfoFi Unlocks

• Attention as an Asset: Transform attention into a quantifiable and valuable resource that can be priced.

• Market-Driven Distribution: Let markets determine which brands or topics deserve attention.

• Democratized Participation: Empower everyone — creators and users alike — to participate and capture their fair share of value in this inclusive economy.

In this system, AI leverages algorithms to tokenize the digital economy, while market forces serve as the arbiter of value by drawing on the collective participation of all market players. AI-powered InfoFi establishes a new distribution network that is fairer, more transparent, and more efficient.

This is the heart of what we are building at Kaito.