It uses cutting-edge technology called Fully Homomorphic Encryption (FHE), which ensures data remains encrypted throughout the entire process—meaning it’s never decrypted, even when being processed.🔒

At the core of BasedAI is Cerberus Squeezing, a feature that transforms LLMs into Zero-Knowledge Models (ZK-LLMs). This allows the network to process data securely without ever exposing it.

By using Cerberus Squeezing, BasedAI also improves performance, making interactions faster and more efficient without compromising security. ⚡

This ensures that miners, validators, and users can securely process data while keeping it private.

Disclaimer: It’s important to note that this article is not intended as financial advice. Rather, it is meant to serve as a foundation for your own research and exploration.

🧠 How BasedAI Works: The Role of "Brains"

The BasedAI platform runs on a decentralized network of units called Brains.

Each Brain handles specific computing tasks and runs customized LLMs. Brain owners can select which LLM their network will use, and every LLM can be turned into a Zero-Knowledge LLM (ZK-LLM) to keep data encrypted from start to finish.

This combination of FHE and Cerberus Squeezing guarantees that data privacy is maintained at all stages. 🔐

Brains are essential for processing, and they’re powered by $BASED tokens. These tokens incentivize Brain owners to manage and activate their Brains, with higher rewards for high-performing units. Brain owners can attract miners and validators by offering these tokens. The platform also offers a unique way to acquire Brains using Pepecoin—either by burning or staking Pepecoin for a set period.

💰 Tokenomics and Incentives

To encourage activity and ensure a competitive ecosystem, BasedAI distributes $BASED tokens every 10 seconds to reward Brains in the network.

The supply of $BASED tokens is designed to be deflationary, as the emission rate halves every year. 📉

Miners and validators are key to the platform’s success. Miners run LLMs on powerful GPUs and are incentivized to choose Brains with fewer active miners, allowing them to earn higher rewards. Validators, who ensure the output of LLMs is accurate, are rewarded for selecting Brains with fewer validators, and typically use CPUs for their tasks. 💻

🔑 Acquiring Brains: Pepecoin and Staking

Brains can be acquired in two ways:

1. Burning 1,000 Pepecoin 🔥

2. Staking 100,000 Pepecoin for 90 days ⏳

With a limited number of 1,024 Brains available, this creates a competitive environment.

Each Brain can support up to 256 validators and 1,792 miners. Brain owners can maximize rewards by selecting the most efficient ZK-LLMs and creating incentive models that attract reliable miners and validators.

🏥 Real-World Example: ZK-LLM in Healthcare

Imagine a Medical Records Brain that securely handles sensitive patient data. Using ZK-LLMs, this Brain can process medical information, providing insights and recommendations, all while keeping patient privacy intact. This example highlights how BasedAI can be applied in industries like healthcare, where privacy is critical. 💊

🎯 Conclusion

BasedAI is transforming the world of decentralized computing by ensuring that large language models can be run securely and privately. Through the use of FHE, Cerberus Squeezing, and ZK-LLMs, BasedAI offers a platform where data privacy is guaranteed, while miners and validators are rewarded for their contributions.

The network, powered by Pepecoin and $BASED tokens, creates a competitive yet rewarding ecosystem where everyone benefits. 🌍

Key Features of Elastic Protocol 👀

Functionality🪛

The Elastic Vault automates yield strategies by monitoring the rebase status of $AMPL (positive, negative, or neutral).

This adaptive approach allows the protocol to respond effectively to changes in the $AMPL supply by either minting or burning $EEFI.

Yield Generation💰

🔹 Negative/Neutral Rebase: During neutral or negative rebase periods, $EEFI tokens are minted as rewards for $AMPL stakers.

🔹Positive Rebase: In a positive rebase, the protocol sells a portion of $AMPL to acquire OHM, which is then used to buy and burn, enhancing value for holders by reducing the token supply.

Flywheel Strategy ⚙

Elastic Protocol operates as a flywheel, meaning it cycles yield strategies based on $AMPL’s rebase state, maximizing yield opportunities and mitigating risk:

🔹 Expansion (Positive Rebase): When $AMPL supply increases, the protocol sells part of the gain for OHM, which is used to buy and burn $EEFI, reducing supply.

🔹 Contraction (Negative Rebase): When $AMPL supply contracts, $EEFI is minted for those staking $AMPL in the vault.

🔹 Steady State (Neutral Rebase): During periods with no $AMPL supply changes, $EEFI is still minted for stakers, maintaining yield generation continuity.

Yield Opportunities

AMPL Stakers: Earn rewards in $EEFI and $OHM.

Liquidity Providers (OHM/EEFI LPs): Rewards are based on $AMPL’s rebase state—receiving $OHM in positive rebases, and $EEFI in neutral or negative rebases.

Tokenomics EEFI Token Supply

The supply of $EEFI is dynamic, influenced by several factors:

1. $AMPL Staked in the Vault: The amount staked affects how much $EEFI is minted or burned.

2. AMPL Rebase Status: Positive rebases burn $EEFI, while neutral/negative rebases mint it.

3. EEFI Burn Rate: A daily burn rate controls supply reduction.

4. Positive Rebase Duration: After 15 consecutive days without a positive rebase, $EEFI minting pauses to control inflation.

Token Distribution

🔹 AMPL Stakers: Receive 55% of minted $EEFI or purchased OHM.

🔹 EEFI/OHM Liquidity Providers: Allocated 35%.

🔹 Elastic Finance DAO Treasury: Retains 10% for protocol growth, liquidity, and operational funding.

EEFI Bonds 🤔

$EEFI can be purchased at a discount via the Elastic Protocol’s bonding mechanism.

Bonds are sold in a reverse Dutch auction, where prices decrease over time but have a price floor, ensuring no excessive devaluation.

Bond buyers benefit from 👀

1. Discounted EEFI with a vesting period (7–20 days).

2. No Fees or Price Slippage compared to decentralized exchanges.

3. Contribution to Protocol Liquidity, strengthening the ecosystem’s financial base.

EEFI Token Supply Breakdown

Estimated Max Supply: 170,000 tokens.

Distribution:

🔹 Liquidity Fundraiser: 28%

🔹 Team and Advisors: 21%

🔹 Partner Program: 2%

🔹 DAO Treasury: 26% (allocated for liquidity, development, growth, and rewards).

Growth Assets

The Elastic Protocol aims to acquire growth assets that continuously generate yield. Revenue from these assets contributes to a perpetual buy-and-burn mechanism for $EEFI, fostering long-term value.

Examples of growth assets include:

🔹 Revenue Assets: $GMX, $HMX.

🔹 Yield-Bearing Assets: $USDC, $sDAI, $USDe, $LSTs.

🔹 Real Yield-Bearing Assets: $PENDLE.

🔹 Rebase-Bearing Assets: $AMPL, $OHM.

AMPL & OHM Utilities 🪛

AMPL:

🔹As DeFi’s first rebasing asset, $AMPL dynamically adjusts its supply based on demand, making it resilient to market conditions.

🔹It has established a track record, enduring multiple market cycles and becoming a highly secure, elastic asset.

OHM:

🔹Liquidity: OHM is essential for Elastic Protocol’s liquidity strategy, supporting efficient asset distribution.

🔹Yield Ecosystem: Part of the EconOHMy ecosystem, OHM expands Elastic Protocol’s yield opportunities.

🔹Decentralization: OHM’s growing decentralization presents it as a stable alternative to traditional stablecoins.

DAO Governance and Mission

The Elastic Finance DAO governs the protocol, focusing on decentralized asset strategies and exploring yield opportunities beyond stablecoins.

The DAO’s mission includes:

🔹 Developing resilient, adaptable yield strategies for all market conditions.

🔹 Pursuing innovative opportunities for protocol growth and ecosystem expansion. The Elastic Finance Protocol combines yield-generation mechanisms, dynamic supply control, and diversified assets to create a robust platform for decentralized finance growth

Empyreal's about to blow your mind with EmpyrealSDK & Simulacrum, where social media meets blockchain magic. Soon, you’ll be able to trade, bridge, tip, and launch on X, Reddit, TikTok, and more. The future of Web3 development is here.

Empyreal - $EMP

Empyreal bridges the gap between the growing Web3 landscape and traditional developers, providing an interface for developers who may not be familiar with blockchain-centric languages like Solidity.

EmpyrealSDK and the Enclave work together to make Web3 development more accessible, efficient, and cost-effective.

EmpyrealSDK is driven by a vision to democratize the crypto space, similar to how Shopify revolutionized eCommerce and Stripe streamlined payments processing for everyday users.

With the SDK, the goal is to empower developers, regardless of their blockchain knowledge, to contribute to Web3 innovations.

This enables a smoother development pathway for applications like automated trading systems and market making, without requiring mastery of Solidity or in-depth understanding of each protocol's intricacies.

The SDK acts as a simpler interface, not only working with a REST API but also offering models like the token model. These models are available both in the back-end and within the SDK, each designed to handle specific tasks.

For example, DEX functions (like making a swap on Uniswap on Ethereum) are simplified through the SDK, making it easier to interact with them.

EmpyrealSDK plays a crucial role in the world of blockchain automation, providing bot developers with significant advantages. It also offers a simplified yet powerful framework for creating Telegram integrations with the SDK.

Simulacrum Platform - First Empyreal platform

Empyreal has created Simulacrum, a cutting-edge platform that uses Existential Attestations of External Media to build a Synthetic Blockchain. This unique method relies on public social media profiles to reach a consensus on the status of a protocol.

Key features of Simulacrum:

1. Synthetic Blockchain: Simulacrum creates a synthetic blockchain by collecting confirmations (attestations) from different people about social media posts at specific times. This is similar to how Solana’s Proof of History orders transactions.

2. MetaProtocol: Like Ordinal Theory, Simulacrum builds a layer on top of existing blockchains (a metaprotocol). This allows new protocols to be created, which can be tracked and used by third parties across different blockchain apps.

3. Cross-Platform Compatibility: The metaprotocol can run on any blockchain. It uses an oracle network to confirm publicly available information.

4. Wallet-Free Transactions: Instead of using a wallet, users can make transactions directly on supported social media platforms. Indexers then confirm these transactions and complete them on the blockchain.

5. Synthetic and Base Layer Integration: The synthetic blockchain can connect with the underlying blockchain, making social media-based actions work smoothly with established blockchain networks.

6. Identity Management: By gathering information from various social media platforms, Simulacrum lets users manage their identity across different networks, making Web3 easier to use.

Tokenomics:

• $EMP Chain: Arbitrum

• Total supply: 300,000 $EMP

Revenue Share Model:

• A fee of 0.35% will be applied to every transaction enabled via the EmpyrealSDK modules.

• 50% of accrued revenues will be shared with $EMP token stakers once daily revenue exceeds $2,500 for at least 15 days in a 30-day period.

• In the intervening period (when daily revenue is <$2,500), the proceeds will be gathered in a reward pool. Once the revenue threshold is reached, the accumulated amount in the pool will be distributed to stakers.

Staking:

• There will be no minimum requirement of $EMP tokens for staking eligibility.

• APR reward mechanism for staking participants will be ONE of the following:

  • Participants are rewarded proportionally to the length of time they have staked (up to 6 months).

  • A linearly increasing reward system, where multiplier points are accrued based on the period of time each wallet's tokens have been locked up.

Technicals

As for the technical part, we are expecting a smaller correction, (since we pumped almost 200% in just two weeks) before the continuation to ATH levels. All we have is three, weak resistance points that we have to flip.

Team

The Empyreal leadership team brings decades of experience from top tech companies like Google and FAANG firms.

They specialize in software development, business growth, branding, and marketing, with expertise in Rust, Python, AR/VR, and the crypto space. With strong backgrounds in creative production, venture capital, and content strategy, they are driving Empyreal toward lasting success and industry leadership. 

📈 80% increase in average amount stolen per heist
By July 2024, $1.58 billion in crypto was stolen, up 84.4% from 2023. Despite a slight 2.76% rise in hacking incidents, the average value stolen per hack surged 79.46% to $10.6 million, driven by Bitcoin's 130% price increase. Bitcoin now makes up 40% of stolen funds, with hackers returning to centralized exchanges like DMM, which lost $305 million.

💰 Stolen funds inflows nearly double to $1.58 billion
Crypto theft has surged, with inflows of stolen funds almost doubling from $857 million to $1.58 billion. Despite last year's decrease in such incidents, this year has seen a sharp reversal. Centralized exchanges are becoming prime targets again, as attackers shift from DeFi protocols back to platforms holding large amounts of Bitcoin and other major assets.

💰 Ransomware targets growing larger, breaking records in 2024
2024 is shaping up to be the worst year yet for ransomware attacks. Hackers are going after larger organizations that can pay higher ransoms, leading to a record $75 million ransom payment to the Dark Angels group. The median ransom payment has skyrocketed from $200,000 in early 2023 to $1.5 million by mid-2024, as attackers focus on critical infrastructure and businesses with deep pockets.

We sourced this information from Chainanalysis : 2024 Crypto Crime Mid-year Update Part 1: Cybercrime Climbs as Exchange Thieves and Ransomware Attackers Grow Bolder

The exponential rise in artificial intelligence (AI) has significantly increased the demand for computational power, especially in AI model training and inference. Traditionally, this computational power has been managed through centralized clusters of GPUs, primarily controlled by tech giants such as Amazon Web Services, Microsoft Azure, and Google Cloud. However, these solutions come with high costs and limited accessibility. To address these issues, decentralized GPU networks are emerging as a scalable, cost-efficient, and secure alternative.

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The Evolution and Role of GPUs in AI

GPUs, initially designed for rendering graphics, have become essential for AI workloads due to their ability to process parallel tasks. Over the past decade, GPUs have evolved to support specialized components like tensor cores, optimized for large-scale AI workloads. Today, high-end GPUs such as Nvidia’s A100 and H100 are vital for complex computations like training neural networks. Despite their power, the associated costs are high, creating a barrier for many firms. For instance, training a single "1-trillion parameter GPT" model on Nvidia A100 GPUs could cost approximately $120 million.

Decentralized GPU networks offer a solution by utilizing idle GPUs scattered across different nodes, reducing costs and democratizing access to computational resources. These networks are built on blockchain-based marketplaces where participants can share and monetize their underutilized GPUs. This decentralized approach has several key advantages:

• Cost Efficiency: By using idle GPUs, decentralized networks are more affordable compared to traditional cloud solutions.

• Scalability: Decentralized networks can easily scale as more participants join, making high-performance computing more accessible.

• Security: Data transfer is distributed, reducing the risks associated with central points of failure.

• Accessibility: Access to these networks is democratized, enabling a broader range of users to leverage powerful computing resources.

Prominent Players in Decentralized GPU Networks

Companies like Aethir and Gensyn have already developed decentralized GPU networks to meet the growing demand for AI and high-performance computing. Aethir, for instance, uses blockchain to incentivize participants through its $ATH token, allowing contributors to validate network operations and earn rewards. This decentralized system has attracted significant attention, with Aethir's network expanding to include 66,000 nodes. The company reported $146 million in node sales, with high-profile clients such as Foxconn, Supermicro, and Hewlett Packard Enterprise.

Another prominent player, Gensyn, based in London, raised $51.1 million in a seed round to further develop its decentralized cloud infrastructure. Similarly, io.net, a U.S.-based company, raised $35 million to support its late-stage VC plans to expand GPU utilization across a decentralized cloud network.

Challenges and Future Outlook

Despite the promising potential of decentralized GPU networks, several challenges remain. Efficiently allocating resources and ensuring smooth task distribution across decentralized resources is a complex issue that needs to be addressed. New algorithms must be developed to optimize the allocation of computational tasks and prevent delays.

However, the decentralized GPU space is expected to grow rapidly, especially with the continued rise of video generative AI models and open-source AI frameworks. As the demand for high-performance computing increases, decentralized networks will become a critical tool, offering scalable and cost-effective solutions. Additionally, the integration of edge technologies like mobile devices is expected to further accelerate this trend, making high-performance computing more accessible and lowering latency for real-time applications.

In conclusion, decentralized GPU networks represent a significant advancement in how computational power can be shared and utilized globally. As companies continue to innovate and scale these networks, they are set to play a pivotal role in the future of AI and high-performance computing.

Extra

These are just a few examples of VC-backed companies that are shaping the future of decentralized GPU networks. With continued investment and innovation, these networks are poised to redefine how we approach AI computing and resource sharing.

"The carry trade is unwinding"

However, many people are unfamiliar with what this truly means or even what the carry trade entails. In today's brief summary, we will cover the origins and fundamentals of this investment strategy, along with its benefits and risks.

What is a carry trade?

carry trade is a type of foreign exchange trade in which you borrow money in one currency at low interest and use it to make high interest investments in another currency. As the name indicates, in the Japanese carry trade the currency you borrow is the Yen — Japan’s currency. This carry trade is a widely used investment strategy in which investors borrow money in Japan, where interest rates have traditionally been near zero or very low, and use the proceeds to invest in higher-yielding assets abroad. By doing this, they aim to profit from the interest rate differential between Japan and other countries.

Specifically, the Bank of Japan has been keeping interest rates low since the mid-1990s in an effort to revive the economy after a stock market crash caused a recession. Investors, primarily hedge funds and asset managers, saw the opportunity to take advantage of Japan’s low interest rates by borrowing the Yen. Borrowers then convert the borrowed yen into foreign currencies, using the funds to purchase assets in countries where interest rates are higher. For example, U.S. stocks, especially in sectors like tech, and bonds have been popular targets due to their high returns. The key to success is that the returns on the foreign assets must exceed the cost of borrowing in yen. Additionally, if the yen weakens against the currency of the target asset, the investor benefits further when repaying the loan, as it takes fewer units of the target currency to buy back the borrowed yen.

This not only generates steady returns, but also leads to a snowball effect – if enough people make the same carry trade, the returns can increase exponentially. But wait a minute, how does overexploiting an anomaly lead to more profits? Think of the laws of supply and demand. The more demand there is for a high interest investment in a given currency, the more valuable the currency and the investment will become.

Let us clarify and visualize this concept with a easy to follow example:

Imagine a Japanese bank was offering loans at 1% interest a year and you borrow ¥6,000,000. You then exchange your ¥6,000,000 for $55,000 which you invest in US bonds that yield 5% a year. This means that, after settling the debt, you stand to make a profit of 4% a year. This not only generates steady returns, but also leads to a snowball effect – if enough people make the same carry trade, the returns can increase exponentially. Short, the more demand there is for a high-interest investment in a given currency, the more valuable the currency and the investment will become. These profit opportunities lead to people using leverage to maximise profits

Risks and Unwinding of the Carry Trade

The aforementioned currency fluctuation also has a flipside.

If the yen appreciates sharply against the target currency, investors face losses because they will need to repay their yen loans at a higher exchange rate.

This is exactly what has been happening in 2024, as noted in Jeffrey Kleintop’s article, "Carry Trade Unwind: Is It Really Over?" The yen rose by 14% against the U.S. dollar in less than a month, primarily due to surprises from the Bank of Japan (BOJ), which raised interest rates more than expected and committed to further rate hikes and quantitative tightening. This rapid appreciation of the yen has led to a massive unwinding of the carry trade, where investors are forced to sell their foreign assets to cover their yen-denominated loans, causing broader market disruptions similar to a margin call.

The appreciation of the Yen (and the unwinding of the carry trade has been fueled by various factors:

1. Bank of Japan’s Monetary Tightening: The Bank of Japan has maintained an exceptionally low-interest rate policy since the mid-1990s to stimulate economic growth and counter deflationary pressures. This strategy was implemented following the economic downturn triggered by the burst of Japan's asset price bubble in the early 1990s, which resulted in a prolonged period of recession and stagnation. Despite these efforts, the strategy failed to yield significant economic improvement, leading commentators to refer to the period from 1991 to 2021 as Japan’s ‘lost decades.’ In response, the BOJ recently ended its yield curve control policy, signaling a shift toward a more aggressive monetary tightening stance and marking the beginning of a reversal from its long-standing ultra-loose monetary policy. As the BOJ raised interest rates, the differential between Japan and other countries' rates narrowed, diminishing the attractiveness of carry trade opportunities. This shift led to a sharp decline in the NIKKEI 225 (Japan's primary stock index) and a significant appreciation of the Yen against the US Dollar.

   

2. U.S. Economic Slowdown: Recent disappointing economic data from the U.S., such as slower-than-expected GDP growth and weaker employment figures, have raised concerns about the sustainability of the country's economic recovery. This slowdown has been further exacerbated by underwhelming earnings reports from major technology giants like Alphabet and Tesla, which failed to meet market expectations. These factors have put downward pressure on the U.S. dollar, contributing to heightened market volatility. Additionally, the Federal Reserve's decision to initiate rate cuts in response to the slowing economy has significantly impacted the carry trade. As U.S. interest rates decrease, the interest rate differential between the U.S. and other countries narrows, making it less attractive for investors to borrow in low-yielding currencies and invest in higher-yielding U.S. assets. This narrowing differential prompts a carry trade unwind, where investors reverse their positions by selling off U.S. assets and repaying their borrowed funds, often leading to a rapid appreciation of funding currencies like the yen and a decline in U.S. asset prices, thereby exacerbating market volatility.

   

What are the implications of the unwinding? If these are long-term, will they ever end?

The unwinding of the yen carry trade is unfolding in distinct phases, each with unique implications for financial markets globally.

Short-Term Unwind: The most dramatic aspects of the short-term carry trade unwind occurred when speculative positions in the yen futures market were rapidly closed. Hedge funds and traders who had taken short positions in the yen found themselves forced to unwind these positions. This created a cascading effect in the markets, as the rapid closure of these positions led to further appreciation of the yen, causing additional forced unwinding. According to data from the Commodity Futures Trading Commission, net short yen contracts were reduced by half within just a few days following the BOJ's rate hike, indicating that a significant portion of speculative positioning was quickly unwound. This sharp adjustment exemplifies the volatility and sudden movements that characterize a short-term carry trade unwind, where leverage amplifies losses, leading to a rapid and forceful exit from positions.

Medium to Long-Term Implications: Over the long term, the reversal of the yen carry trade could have profound effects on capital flows, potentially altering decades-long patterns of Japanese investment abroad. Japan currently holds the world's largest net international investment position, with approximately $3.3 trillion invested in foreign assets, particularly in U.S. Treasuries, equities, and other global financial instruments. As the BOJ continues to tighten its monetary policy, Japanese investors might be incentivized to repatriate some of these overseas investments, as higher domestic interest rates and a stronger yen make foreign investments less attractive. This capital repatriation could have ripple effects on global markets, particularly in regions that have seen substantial Japanese investment over the years. However, it is unlikely that all of this capital will flow back into Japan, given the continued attractiveness of diversified investment opportunities worldwide. Structural factors, such as government policies, demographic considerations, and the pursuit of yield, will still drive a portion of Japanese capital to remain invested abroad.

However, several factors could halt or slow the carry trade unwind.

1. Pause or reversal in the BOJ's tightening stance: This could diminish the upward pressure on the yen, allowing speculative positions to stabilize. Similarly, if the U.S. Federal Reserve were to initiate rate hikes or signal a more hawkish stance, the interest rate differential might widen again, making the carry trade more attractive and potentially reviving the trend.

2. Increased Risk Appetite in Global Markets: If global markets shift toward a more risk-on environment, investors may once again be willing to engage in the carry trade, even in a less favorable interest rate environment. A resurgence in confidence, driven by positive economic data, strong corporate earnings, or geopolitical stability, could encourage investors to re-enter carry trade positions, slowing the unwind process.

3. Structural Factors Supporting Low Japanese Yields: If structural factors, such as Japan's aging population and the high savings rate, continue to keep domestic demand for investments low, Japanese interest rates might not rise significantly even with a tightening stance by the BOJ. This could maintain some level of attractiveness for the carry trade, as the cost of borrowing in yen would remain relatively low.

Conclusion

The unwinding of the yen carry trade has significant implications for global financial markets, as it represents a shift in long-standing investment strategies that have fueled cross-border capital flows for decades. The BOJ’s shift towards monetary tightening, combined with economic uncertainty in the U.S., has triggered a reversal of this popular trade, leading to heightened volatility and sharp adjustments in both currency and asset markets. While the most dramatic effects may have already passed in the short term, the medium- and long-term impacts remain uncertain, particularly if the BOJ continues to raise rates and repatriation of Japanese capital accelerates. Ultimately, the evolving dynamics of interest rate differentials and global market conditions will dictate whether the carry trade remains a viable investment strategy or if this marks the beginning of a more profound realignment in global capital flows.

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