Connect with us

Published

on

For every genuine blockchain project harnessing artificial intelligence there are 100 coins trading off the hype.

Magazine spoke with Near founder Illia Polosukhin, Framework Ventures founder Vance Spencer, MakerDAO founder Rune Christensen, Richard Ma from Quantstamp, Ralf Kubli from Casper and others to explore some of the key hype-free, genuine use cases for AI in crypto and blockchain.

We’re rolling out one genuine use case for AI in crypto each day this week — including reasons why you shouldn’t necessarily believe the hype.

AIs can help run DAOs

Atlas
MakerDAO is creating an Atlas to the entire project to assist in AI governance (Maker)

Decentralized autonomous organizations, as they exist today, are something of a fraud. As Framework Ventures founder Vance Spencer points out, they are “not actually autonomous. There’s a bunch of people in the middle.

“It just seems like AI is really our only way to actually make the DAO concept work,” he says. 

Given LLMs hallucinate between 3% to 27% of their output at present, the technology is too immature to run a DAO by itself or to enforce governance rules, says Maker founder Rune Christensen. Nevertheless, he’s mapped out an ambitious plan for AIs to help run MakerDAO and its forthcoming subDAOs in his Endgame manifesto.

“People misunderstand what we mean with AI governance, right? We’re not talking about AI running a DAO,” he says.

“What AI is so great at, is replacing the most soul numbing, dumbest part of the work.” 

One of the big difficulties with DAOs is that it’s very difficult for members dispersed around the globe to understand what everyone else is doing and for tokenholders to understand the issues in the DAO well enough to cast an informed vote.

Illia
Near founder Illia Polushkin is an expert in both AI and blockchain.

Near founder Illia Polushkin — an expert in both AI and blockchain — explains that AIs really shine when it comes to monitoring what’s going on and then summarizing and communicating that information effectively.

“In a way, that’s a manager’s job,” he says. “They know exactly what’s happening and they communicate to everyone exactly the part you need to know, as well as broader context about what’s happening.”

He says AI can scale up to work with thousands of people, onboard new DAO members, manage logistics and coordinate everyone’s tasks.

The broader direction of the DAO can still be set by the community, likely via an elected board of directors.

“It can still be overseen by the community, they can provide feedback and decide on what are the goals for the DAO.”

Read also


Features

Are DAOs overhyped and unworkable? Lessons from the front lines


Features

Wild, Wild East: Why the ICO Boom in China Refuses to Die

The Near future… of AI-assisted DAO

Polushkin says the Near Foundation plans to experiment with the use of AI to coordinate smaller tasks before graduating to more complex and important jobs. The hope is that eventually, the AI will be able to handle the day to day management.

“I think the role of me and other folks in the system should be replaced in many ways, right?” Polushkin says.

“You know, we can still come up with ideas, but I think the coordination of all the functions (can be handled by AI).”

Members of the Near community have already experimented with building an AI that can autonomously decide which projects to support with funding, based on whether it believes a proposal satisfies the grant program criteria, and then automatically fund it from the treasury. 

Maker’s AI Atlas

Maker’s approach will be to use various forms of AI tools — called Governance Artificial Intelligence Tools (GAITs) — as a guide to the entire project. It’s currently undertaking the mammoth task of cataloging in a formalized dataset what’s going on, who is doing what, along with all the rules that govern the workings of the DAO and everything that Maker has ever done. They’re calling the dataset “Atlas,” as it will give a global overview of the entire project — and it will be updated in real-time.

“Having that sort of central repository of data just makes it actually realistic to have hundreds of thousands of people from different backgrounds and different levels of understanding  meaningfully collaborate and interact because they’ve got this shared language.”

Community members can use GAITs to find and bid on projects, with the AI providing instant feedback on whether a proposal fits within the guidelines, overarching aims and budget. The ability to instantly translate between languages will help communicate better with community members based in different parts of the globe.

Rune
Rune Christensen talking up Endgame and SubDAOs at Token2049.

Fullblown AI-assisted DAO governance is unlikely to be ready for the launch of Maker’s four new subDAOs in early 2024, but Christensen sees huge potential in the future. 

“The AI strategy just changes how many humans you need in order to have a successful DAO,” he says.

“It’s possible that once you really get AI-assisted governance to a level of maturity, you may have a lot more DAOs than you have humans.”

You can read more on what Maker is up to here.

Read also


Features

Joe Lubin: The truth about ETH founders split and ‘Crypto Google’


Features

Guide to real-life crypto OGs you’d meet at a party (Part 2)

Don’t believe the hype

AI is already a useful tool for DAOs, but it will be a long time before AI will be mature enough to actually run DAOs.

Given the fierce politics in DAOs (often around who gets funding) there will a temptation to outsource decision-making to an “unbiased AI,” but this is not possible with any degree of confidence yet, given the state of the technology.

The current generation of LLMs hallucinate their answers at least 3% of the time, making them an unreliable guide to DAO governance and could see them potentially steering community members down the wrong path while attempting to coordinate them.

Given this unreliability, it’ll be a long time before you’d trust one with the keys to your treasury without strict guidelines and spending caps to mitigate any errors.

Also read — Real AI use cases in crypto, No. 1: The best money for AI is crypto

Andrew Fenton

Andrew Fenton

Based in Melbourne, Andrew Fenton is a journalist and editor covering cryptocurrency and blockchain. He has worked as a national entertainment writer for News Corp Australia, on SA Weekend as a film journalist, and at The Melbourne Weekly.

Continue Reading

Politics

The cost of innovation — Regulations are Web3’s greatest asset

Published

on

By

The cost of innovation — Regulations are Web3’s greatest asset

The cost of innovation — Regulations are Web3’s greatest asset

Opinion by: Hedi Navazan, chief compliance officer at 1inch

Web3 needs a clear regulatory system that addresses innovation bottlenecks and user safety in decentralized finance (DeFi). A one-size-fits-all approach cannot be achieved to regulate DeFi. The industry needs custom, risk-based approaches that balance innovation, security and compliance.

DeFi’s challenges and rules

A common critique is that regulatory scrutiny leads to the death of innovation, tracing this situation back to the Biden administration. In 2022, uncertainty for crypto businesses increased following lawsuits against Coinbase, Binance and OpenSea for alleged violations of securities laws.

Under the US administration, the Securities and Exchange Commission agreed to dismiss the lawsuit against Coinbase, as the agency reversed the crypto stance, hinting at a path toward regulation with clear boundaries.

Many would argue that the same risk is the same rule. Imposing traditional finance requirements on DeFi simply will not work from many aspects but the most technical challenges.

Openness, transparency, immutability, and automation are key parameters of DeFi. Without clear regulations, however, the prevalent issue of “Ponzi-like schemes” can divert focus from effective innovation use cases to conjuring a “deceptive perception” of blockchain technology. 

Guidance and clarity from regulatory bodies can reduce significant risks for retail users.

Policymakers should take time to understand DeFi’s architecture before introducing restrictive measures. DeFi needs risk-based regulatory models that understand its architecture and address illicit activity and consumer protection. 

Self-regulatory frameworks cultivate transparency and security in DeFi

The entire industry highly recommends implementing a self-regulatory framework that ensures continuous innovation while simultaneously ensuring consumer safety and financial transparency. 

Take the example of DeFi platforms that have taken a self-regulatory approach by implementing robust security measures, including transaction monitoring, wallet screening and implementing a blacklist mechanism that restricts a wallet of suspicion with illicit activity. 

Sound security measures would help DeFi projects monitor onchain activity and prevent system misuse. Self-regulation can help DeFi projects operate with greater legitimacy, yet it may not be the only solution.

Clear structure and governance are key

It’s no secret that institutional players are waiting for the regulatory green light. Adding to the list of regulatory frameworks, Markets in Crypto-Assets (MiCA) sets stepping stones for future DeFi regulations that can lead to institutional adoption of DeFi. It provides businesses with regulatory clarity and a framework to operate.

Many crypto projects will struggle and die as a result of higher compliance costs associated with MiCA, which will enforce a more reliable ecosystem by requiring augmented transparency from issuers and quickly attract institutional capital for innovation. Clear regulations will lead to more investments in projects that support investor trust.

Anonymity in crypto is quickly disappearing. Blockchain analytics tools, regulators and companies can monitor suspicious activity while preserving user privacy to some extent. Future adaptations of MiCA regulations can enable compliance-focused DeFi solutions, such as compliant liquidity pools and blockchain-based identity verification.

Regulatory clarity can break barriers to DeFi integration

The banks’ iron gate has been another significant barrier. Compliance officers frequently witness banks erect walls to keep crypto out. Bank supervisors distance companies that are out of compliance, even if it’s indirect scrutiny or fines, slamming doors on crypto projects’ financial operations.

Clear regulations will address this issue and make compliance a facilitator, not a barrier, for DeFi and banking integration. In the future, traditional banks will integrate DeFi. Institutions will not replace banks but will merge DeFi’s efficiencies with TradFi’s structure.

Recent: Hester Peirce calls for SEC rulemaking to ‘bake in’ crypto regulation

The repeal of Staff Accounting Bulletin (SAB) 121 in January 2025 mitigated accounting burdens for banks to recognize crypto assets held for customers as both assets and liabilities on their balance sheets. The previous laws created hurdles of increased capital reserve requirements and other regulatory challenges.

SAB 122 aims to provide structured solutions from reactive compliance to proactive financial integration — a step toward creating DeFi and banking synergy. Crypto companies must still follow accounting principles and disclosure requirements to protect crypto assets.

Clear regulations can increase the frequency of banking use cases, such as custody, reserve backing, asset tokenization, stablecoin issuance and offering accounts to digital asset businesses.

Building bridges between regulators and innovators in DeFi

Experts pointing out concerns about DeFi’s over-regulation killing innovation can now address them using “regulatory sandboxes.” These dispense startups with a “secure zone” to test their products before committing to full-scale regulatory mandates. For example, startups in the United Kingdom under the Financial Conduct Authority are thriving using this “trial and error” method that has accelerated innovation.

These have enabled businesses to test innovation and business models in a real-world setting under regulator supervision. Sandboxes could be accessible to licensed entities, unregulated startups or companies outside the financial services sector.

Similarly, the European Union’s DLT Pilot Regime advances innovation and competition, encouraging market entry for startups by reducing upfront compliance costs through “gates” that align legal frameworks at each level while upgrading technological innovation.

Clear regulations can cultivate and support innovation through open dialogue between regulators and innovators.

Opinion by: Hedi Navazan, chief compliance officer at 1inch.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Continue Reading

Politics

Kemi Badenoch does not rule out local coalitions with Reform after Thursday’s council elections

Published

on

By

Kemi Badenoch does not rule out local coalitions with Reform after next week's council elections

Kemi Badenoch has not ruled out forming coalitions at a local level with Reform after the council elections on Thursday.

Speaking to Sunday Morning with Trevor Phillips, the Conservative leader did however categorically rule out a pact with Nigel Farage’s party on a national level.

“I am not going into any coalition with Nigel Farage… read my lips,” she said.

Politics latest: UK has ‘recognised all along’ Russia is aggressor – minister

However, she did not deny that deals could be struck with Reform at a local level, arguing some councils might be under no overall control and in that case, “you have to do what is right for your local area”.

“You look at the moment, we are in coalition with Liberal Democrats, with independents,” she said. “We’ve been in coalition with Labour before at local government level.

“They [councillors] have to look at who the people are that they’re going into coalition with and see how they can deliver for local people.”

More on Conservatives

She added: “What I don’t want to hear is talks of stitch-ups or people planning things before the results are out. They have to do what is right for their communities.”

In response, Nigel Farage said: “The Tories broke Britain nationally for 14 years, and their councils continue to break local communities with the highest taxes ever and worst services.

“Reform have no intention in forming coalitions with the Tories at any level.”

A total of 23 councils are up for grabs when voters go to the polls on Thursday 1 May – mostly in places that were once deemed Tory shires, until last year’s general election.

It includes 14 county councils, all but two of which have been Conservative-controlled, as well as eight unitary authorities, all but one of which are Tory.

In addition, there is one Labour-controlled borough being contested.

Ms Badenoch has set expectations low for the Tories, suggesting they could lose all the councils they are contesting.

The last time this set of councils were up for election was in 2021, when the Conservative Party was led by Boris Johnson who was riding high from the COVID vaccine bounce.

Despite not ruling out agreements between the Tories and Reform once the local elections have finished, Ms Badenoch has been at pains to stress she is against any kind of deal with Mr Farage at a national level.

On Friday she criticised talk of “stitch-ups” ahead of next week’s local elections and said she was instead focused on ensuring that voters have a “credible Conservative offer”.

Speculation that the Tories and Reform could join forces heightened after two senior Tories appeared to advocate for some sort of agreement between the two rival parties.

Robert Jenrick, the shadow justice secretary, was captured in a video recording leaked to Sky News vowing to “bring this coalition together” to ensure that Conservatives and Reform UK are no longer competing for votes by the time of the next general election.

Please use Chrome browser for a more accessible video player

What leaked audio of Jenrick tells us

According to the excusive audio Mr Jenrick – who lost the Tory leadership campaign to Ms Badenoch – said he would try “one way or another” to make sure the two right-wing parties do not end up handing a second term to Sir Keir Starmer.

Mr Jenrick has denied his words amounted to calling for a pact with Reform.

Meanwhile, in an interview with Politico, Tees Valley Mayor Ben Houchen also suggested the two parties should join forces in some way.

“I don’t know what it looks like. I don’t know whether it’s a pact. I don’t know whether it’s a merger… [or] a pact of trust and confidence or whatever,” he said.

“But if we want to make sure that there is a sensible centre-right party leading this country, then there is going to have to be a coming together of Reform and the Conservative Party in some way.”

Read more:
Could the local elections reshape British politics?
‘Bring on the fight’ over net zero, says Ed Miliband

All of the other national parties have launched their campaigns for the local elections ahead of the poll next week.

Labour Cabinet Office minister Pat McFadden told Trevor Phillips that he was “not predicting huge Labour gains on Thursday”.

He also ruled out Labour striking deals with any other party.

“The deals on offer after Thursday won’t be between Labour and the Tories and Labour and Reform,” he said.

“But what there’s been a lot of debate about is what’s going to happen between the Tories and Reform, because I’m not even sure if they’re two different parties or one party at the moment.”

Continue Reading

Politics

Federal taxes to be ‘substantially reduced’ once tariffs set in: Trump

Published

on

By

<div>Federal taxes to be 'substantially reduced' once tariffs set in: Trump</div>

<div>Federal taxes to be 'substantially reduced' once tariffs set in: Trump</div>

United States President Donald Trump recently said that federal income taxes would be “substantially reduced” or potentially eliminated once the tariff regime fully sets in.

In an April 27 Truth Social post, Trump added that the focus of the purported tax cuts would be on individuals making less than $200,000 per year.

The US President also said that the “External Revenue Service” — a reference to funding the federal government exclusively through import tariffs instead of the current model of collecting taxes through the Internal Revenue Service (IRS) — is materializing.

Eliminating the federal income tax would likely be a positive catalyst for asset prices, including cryptocurrencies, as the increase in disposable income should partially flow back into productive investments. However, this stimulative effect is not guaranteed.

Taxes, US Government, United States, Donald Trump
Source: Donald Trump

Related: If Trump fired Powell, what would happen to crypto?

Trump’s plan leaves analysts and markets doubting

Trump previously floated the idea of eliminating the federal income tax in an October 2024 appearance on the Joe Rogan Experience, although Trump, who was on the campaign trail at the time, provided scant concrete details on the proposal.

The US President suggested that replacing the federal income tax with revenue from import duties would return the US to a time of prosperity seen during the Gilded Age, in the 19th century, when the US did not have a permanent federal income tax.

Research conducted by accounting automation company Dancing Numbers found that Trump’s proposal could save the average American $134,809 in lifetime tax payments.

Dancing Numbers added that the tax savings could be as much as $325,561 per American if other wage-based income taxes are also eliminated.

On April 2, Trump signed an executive order imposing sweeping tariffs on all US trading partners, which included a 10% baseline tariff on all countries and different “reciprocal” tariff rates on countries with import duties on US goods.

However, since that time, the Trump administration walked back its tariff policies several times, flip-flopping on tariff rates and when the tariff regime would fully take effect.

The Trump administration’s ever-changing rhetoric surrounding trade policies has heightened volatility in the US stock market, caused a rise in US bond yields, and has drawn widespread criticism from financial analysts who say the protectionist trade policies hurt capital markets while achieving little else.

Magazine: Harris’ unrealized gains tax could ‘tank markets’: Nansen’s Alex Svanevik, X Hall of Flame

Continue Reading

Trending