Forward the Original Title: Open Rug 24 - Kaito Three-Pool Model Analysis

Before we dive into Kaito, let’s first answer some key questions

When launching a project, the most important factor is the audience. So, what’s the secret to winning over that audience?

1. The Story. Endorsements, stacking TVL, technical CX, and models/systems — in the end, it all comes down to telling a compelling story. The goal is to get the audience to respond to that story reflexively —

Jack Ma’s on board? Buy! Qin Shi Huang’s project? Throw in the money!

Still confused? Just Google “Pavlov’s dog training.”

1. Community leaders, or dissemination nodes, are like a virus in the collective unconscious. Their job is to spread this “misconception” to more people.

Now, how do we win over these “community leaders”?

Traditional CX methods rely on market shares + subsidies: shareholders hold market shares, and with operating centers offering subsidies and hospitality, they push for massive sales; in Crypto, the model follows KOL procurement.

But both approaches share a common flaw:

• Money is spent before seeing results.
• Dissemination nodes are highly fragmented, so negotiating deals and onboarding can be time-consuming and costly, depending on intermediaries.
• There are too many bad players, and only a few have real influence and the ability to sustain their reach.

So, the ultimate traditional model is the Northern Myanmar park, where control over people’s freedom helps cut down on dissemination costs and maximize results.

To buy out dissemination nodes, Huang Si Lang’s strategy is most effective: entertainment, decapitation, and turning people into dogs.

This is exactly what KAITO does — it provides the infrastructure to mass-purchase dissemination nodes, lowering the cost of launching a project.

Let’s begin by discussing the ideas of “decapitation” and “turning people into dogs.”

In my view, the only real AI-related aspect of KAITO is these concepts — “decapitation” and “turning people into dogs.”

What does “decapitation” mean? It refers to having control over someone’s success or failure, and seizing the power to set prices.

In the past, how much KOLs (Key Opinion Leaders) charged was like a black box. It depended on self-promotion, endorsements from peers, and support from agencies.

Now, I use AI to measure it in various ways: How many Smart Followers do they have? Are they in the inner circle? What topics or projects do their tweets focus on? Are they bullish or bearish? Are they serious or just talking nonsense? How engaged are they with their followers?

And let’s add a global ranking to the mix.

I understand KOLs better than any agency, and when I step in, I take control of the pricing. This forces KOLs to go all out to earn points and rankings, even adjusting their writing style and content to fit Kaito’s scoring system. This is a form of “Pavlov’s dog training” because their livelihood depends on it.

Now, the rest comes down to the three pools.

If you want to be a good dog, a compliant dog, keep reading to understand how Kaito, as the infrastructure of a new era of financial systems, operates.

Kaito’s Three-Pool Analysis - As a Dividend Pool

Kaito is essentially a veToken model, with aspects combining dividend and mutual assistance mechanisms.

First, Kaito operates as a dividend pool. A point pool is essentially always a dividend pool. The main focus in a dividend pool is: sunk cost, payout ratio (the extractable return), and external liquidity.

Why does Kaito create a dividend pool?

The typical purpose of a dividend pool is to establish significant asset or traffic accumulation to secure exit liquidity, like Plustoken’s rug pull, Filecoin’s mining machine sales, or Pi’s advertising strategies.

Kaito, however, uses dividend points to “serve people with benefits” and has attracted the largest CT KOL market globally through specific content-driven standards. As a result, Mindshare has become a de facto “operational index,” replacing Galxe as the go-to for projects.

With traffic, Kaito’s listings gain value, and only with value can bribery elections take place. Project funds are used to provide exit liquidity via Yap points, created from scratch.

Kaito’s Sunk Cost

Kaito follows a Pi-like sunk cost model, where users invest time and energy instead of money to earn points.

Fixed sunk cost: The number of smart followers is similar to Kaito’s mining machine costs, as it is hard to increase quickly in a short period. This represents an index of personal social capital.

Incremental sunk cost: Kaito doesn’t have incremental sunk costs for posting points, but these costs are handled through Connect. By introducing liquidity from external projects through bribery, and implementing periodic lockups to control the number of new points available for voting, Kaito sets a floor price.

Black Box and AI Training of KOLs

Unlike simpler dividend pools with transparent, linear rules, Kaito’s sunk cost control system operates through two “AI” black boxes:

• Defining what qualifies as a “smart follower” → similar to “mining machine costs,”

• The evaluation of interaction and content quality → preventing the abuse of single metrics by mass studios.

Black boxes may seem unfair, but history shows that most people don’t care about fairness; they care about whether they can gain an advantage. As long as it’s controlled within a reasonable range, this black box mechanism can effectively prevent abuse and inflation.

At the same time, through opaque point distribution mechanisms, Kaito subtly guides KOLs to change their content and style, indirectly controlling public opinion.

Kaito also cleverly markets “sunk costs” as “brand influence,” similar to StepN’s branding of “gaming” as “fitness and health.” By linking the goals of the dividend pool with personal benefits, users are made to feel, “Even without Kaito, I should Yap.”

This psychological suggestion amplifies the effect of sunk costs, making it harder for users to exit. The most effective way to condition human behavior to accept AI is to educate people according to AI’s standards, making their actions predictable according to those standards.

Payout Ratio and External Liquidity

From a purely financial perspective, with the introduction of Kaito Connect (discussed below), payouts from Kaito’s dividend pool aren’t solely reliant on future token expectations. Instead, they are driven by external liquidity from project listings, OTC transactions, and airdrops, which serve as external bribery liquidity.

Projects need Kaito listings and, therefore, must engage in bribery, which in turn becomes external liquidity, while also pricing Yap points.

Thus, Kaito could theoretically achieve a dividend pool without payout ratios because what really matters is how much a Yap is worth. Whether the pricing comes from project bribery or token airdrops isn’t that important.

It’s even possible to speculate that $KAITO won’t provide airdrops, or at least not based on Yap. They will intentionally keep Yap and$KAITO on separate tracks to prevent future token prices from influencing KOL participation or project funding. Yap might even be rarer than$KAITO because it’s the currency used to buy mindshare across the network, and to buy influence doesn’t require 700,000 Yap holders.

The logic behind the $KAITO airdrop can be discussed further in a separate issue later.

Kaito’s Three-Pool Analysis - As a Mutual Assistance Pool

As mentioned earlier, KAITO YAP is a newly created asset used to purchase KOLs across the entire network. Its liquidity and pricing are determined through project-driven bribery via Connect, with the veTOKEN bribery model essentially functioning as a mutual assistance pool.

1. Traditional veToken Mutual Assistance Pool Model

Here’s how a traditional veToken mutual assistance pool operates:

• The project offers bribery payouts to LPs in exchange for veToken voting rights (LPs are required to lock their tokens).

• The project then uses these votes to obtain a payout ratio from the main project (e.g., CRV, BERA, TABI).

• The project’s profit is calculated as the payout ratio from the main project minus the bribery payout it provided.

• Successful bribery payouts (debts) are determined by the market, not the project itself.

• If the expected bribery payout exceeds the amount the project can offer, plus the payout ratio from the main project, systemic debt will exceed the liquid assets, causing the pool to collapse.

This aligns with the collapse model of mutual assistance pools in the Three-Pool Theory:

Systemic debt > liquid assets + external liquidity → collapse.

Kaito’s mutual assistance pool model:

• The project (pre-TGE) offers bribery payouts in exchange for KOL votes (these votes are locked for 7 days). Kaito’s listing qualification is equivalent to PoL (Proof of Liquidity) payout ratio.

• The project’s revenue = investment ROI - bribery payout.

Investment ROI ≈ the ROI generated by Kaito’s listing on the mindshare it brings. This ROI is not only driven by the buy orders from traffic but may also be influenced by KOLs impacting exchange listing decisions.

This model cannot grow indefinitely:

The ROI from Twitter as an advertising platform has its limits:

• Even if KOLs are promoting daily, the market’s purchasing power and ROI have a ceiling.

• This means that bribery payouts won’t keep increasing and will stabilize at a balance between market demand and ROI.

Additionally, the investment ROI is also tied to the secondary market performance of selected projects:

• If a project listed by Kaito crashes or rugs in the secondary market:

• Exchanges and retail investors will lose trust in Kaito listings.

• Investment ROI will fall, and bribery payouts will drop, increasing the risk of Kaito’s mutual assistance pool collapsing.

Kaito cannot let systemic debt (bribery payouts) rise endlessly, but it must also avoid letting it plummet. It needs to find a delicate balance. If this debt is measured in Yap units, then Yap should either not be tokenized and freely traded, or it must have an anti-inflation mechanism to prove its scarcity over time.

Kaito’s Current Solution:

• Continuously hosting Launchpad events: this keeps the market fresh and ensures no single project dominates the focus.

• Yap voting lock for 7 days: this sets a 7-day opportunity cost, akin to the liquidation threshold in a mutual assistance pool.

Benefits:

✅ Prevents the market from overly FOMO-ing into a single project, avoiding the risk of overhyping and negative consequences.

✅ Faster flow, preventing KOLs from overthinking or getting stuck, creating a short-term, efficient pump logic.

Drawbacks:

❌ Harder to foster long-term loyalty from community KOLs, as they tend to focus on short-term arbitrage.

❌ Increasing numbers of people like me (those who take the “red pill”) will emerge, and KOLs will focus more on short-term gains rather than building long-term community relationships.

Kaito’s Three-Pool Analysis - Possibility of a Split Pool

As mentioned earlier, YAP either cannot be tokenized and freely traded, serving only as a KOL measurement index, or it can be monetized, but it must have an anti-inflation mechanism. Let’s assume the former, and then $KAITO becomes a separate token independent of YAP’s price. In this case, this token is very likely to have a split pool mechanism.

The current split pool approach is actually quite clear. On one hand, it needs to drive the price of the parent token, and on the other hand, new assets need to be issued around the parent token as compensation.

Connect itself is essentially a launchpad. Although its current popularity cannot be called a complete success, at the very least, it has proven to be feasible.

Now, consider the previous coin listing auction mechanism by Hyperliquid. Due to the slow splitting mechanism in the split pool and the rapid rise of system debt in the mutual assistance pool bribery mechanism, Hyper burned out. But it at least proved that its format can serve as a competitor in the PUMP space.

Is it possible for a project to list a coin via YAP voting, using $KAITO as a whitelist entry ticket, or even using $KAITO as the quote token for opening a pool?

Conclusion

Kaito is essentially a veToken mechanism, similar to Curve/Berachain/TABI dividend + mutual assistance pool, where the core asset is Yap points, not the future $KAITO token.

Kaito uses AI algorithms to quantify KOL influence, mastering the pricing power of dissemination nodes, and forcing KOLs to participate in the dividend pool. At the same time, the black-box point mechanism can influence KOL behavior and public opinion, as well as control point inflation. This is a systematic “Pavlovian dog training” targeting KOLs.

Due to traffic monopoly, Kaito relies on the Connect bribery mechanism to let external projects compete for listing rights, thus granting Yap points pricing and liquidity, rather than purely relying on $KAITO airdrops. This is a clever design for a no-payout dividend pool.

However, Kaito relies on Twitter’s ROI for its advertising, which has a capped return, leading to:

1. Systemic debt (market bribery expectations) cannot increase indefinitely, so Yap points must have an anti-inflation mechanism, or they must give up monetization and liquidity.
2. If a highly promoted project crashes in the secondary market, the whole system faces a “return on investment - actual bribery cost” double-kill risk.

To address this, Kaito sets a 7-day lockup and continuous new listing mechanism to reduce the market expectations for any single project, improve the Yap voting turnover rate, and prevent the systemic risk caused by accumulated opportunity costs.

Since YAP OTC has already emerged, closely monitoring these collapse model-related indicators can effectively guide when to cash out. It’s nice to be with you on this ride, but I will never forget what my ultimate goal is.

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