AI Layer 1: Redefining the Future of Blockchain and Artificial Intelligence

With the rapid development of artificial intelligence technology, traditional blockchain architectures can no longer meet the high-performance computing and complex data processing needs of AI applications. This has led to the rise of Layer 1 blockchain platforms optimized specifically for AI, which exhibit diversified characteristics in terms of technical architecture, application scenarios, and business models.

This article provides an in-depth analysis of five leading AI Layer1 projects: Bittensor, Vana, Kite AI, Nillion, and Sahara.

Bittensor: Decentralized AI Network Infrastructure

Bittensor, as an early explorer in the Blockchain AI field, is dedicated to building an open decentralized artificial intelligence collaboration network. Its goal is to break down the centralized barriers in traditional AI development, allowing more participants to contribute and benefit together.

Unlike traditional centralized AI systems, Bittensor has created an open peer-to-peer ecosystem where participants can receive corresponding rewards based on their contributions to the network.

The technical architecture of Bittensor adopts a dual-layer structural design:

• Root Network (Mainnet): Responsible for the coordination, verification, and issuance management of TAO tokens for the entire system, serving as the hub for resource allocation across the network.
• Subnet Ecosystem: Each subnet acts like an independent AI laboratory, developing specialized solutions for specific AI application scenarios and proving its value in market competition.

This design allows Bittensor to simultaneously balance the overall stability of the network with the specialization of various fields, providing a flexible infrastructure for the development of decentralized AI.

Ecological Development Progress

• The number of subnets has expanded from the initial 32 to over 64, covering various AI application scenarios such as text generation, trading signals, and data labeling.
• The active user base has reached 140,000, doubling compared to the previous year.
• The total valuation of the subnet market exceeds 100 million USD, with a daily trading volume maintained at around 45 million USD.
• Institutional participation has significantly increased, with well-known funds incorporating TAO into their decentralized AI funds, adjusting the weight to 29.55%.

These data indicate that Bittensor is gaining recognition from an increasing number of market participants, and its ecosystem is entering a positive development track.

The recent dTAO (Dynamic TAO) system upgrade completed by Bittensor is an important innovation in its economic model. The core of this upgrade lies in optimizing the distribution mechanism of the TAO token, shifting from a resource allocation method that relies on the subjective judgment of validators to a more market-oriented allocation mechanism, allowing resources to flow more accurately to subnets that truly possess competitiveness.

The original economic model of Bittensor has exposed several key issues during actual operation:

1. Lack of objectivity in the evaluation mechanism: As the number of subnets increases, it becomes difficult for validators to comprehensively and objectively assess the actual value of each subnet, leading to a gradual decline in allocation efficiency.

2. Imbalance of power structure: Many validators are also subnet operators, and this overlap of roles can easily lead to conflicts of interest. Validators may favor the subnet they are involved in, and even engage in private transactions.

3. Participation Barrier: Ordinary TAO holders find it difficult to directly influence the network's resource allocation decisions, with power overly concentrated in the hands of a few validators.

To address these issues, the dTAO upgrade introduced a dynamic resource allocation system based on market mechanisms.

This system transforms each subnet into an independent economic unit, driving resource allocation through the actual needs of users. Its core innovation is the subnet token (Alpha token) mechanism:

• Operating principle: Users can obtain Alpha tokens issued by various subnetworks by staking TAO, which represent the users' support for specific subnetworks.
• Resource allocation logic: The market price of Alpha tokens serves as a signal for measuring the demand intensity of the subnet. Initially, the price of alpha tokens is the same, with only 1 TAO and 1 alpha token in each pool. As liquidity of the two tokens in the subnet increases, the price of alpha tokens will also change accordingly. The distribution of TAO is proportionally allocated based on the price of subnet tokens among all tokens, with higher-priced subnets receiving more TAO allocation, thus achieving automatic optimization of resource configuration.

This mechanism significantly improves the efficiency and fairness of resource allocation, making the value of the TAO token more stable and providing more avenues for ordinary users to participate in network governance.

The currently most active subnets include:

• Subnet Targon No. 4: Focused on AI inference services for text generation, characterized by fast response speed and low cost.
• Subnet 64 Chutes: Provides various LLM API interfaces, enabling developers to build and deploy AI applications on the Bittensor network.
• Subnet 8 PTN: Focused on the financial sector, incentivizing miners to generate accurate trading signals through a reward mechanism, covering various financial markets such as foreign exchange and cryptocurrencies.
• Subnet 52 Dojo: Perform data labeling and encourage users to earn tokens through data labeling.

Vana: Data Sovereignty and Value Reconstruction Platform

The Vana project focuses on addressing a core issue in today's digital economy: the ownership of personal data and the distribution of its value. In the current internet ecosystem, users' data is largely monopolized and controlled by large technology companies, while the users who actually create this data rarely benefit from it. Vana's innovation lies in establishing an ecosystem where users truly own and control their own data, while also being able to derive economic returns from it.

As an EVM-compatible Layer 1 Blockchain network, Vana's technical architecture consists of five core components:

1. Data Liquidity Layer: This is the core of the Vana network, which realizes the incentivization, aggregation, and verification of data assets through Data Liquidity Pools (DLP). Each DLP is a smart contract specifically designed to aggregate certain types of data assets, such as social media data, browsing history, etc.
2. Data Portability Layer: Ensures that user data can be easily transferred between different applications and AI models, enhancing the flexibility of data usage.
3. Universal Connectome: Track real-time data flow within the entire ecosystem to form a data ecology map, ensuring transparency of the system.
4. Non-custodial data storage: One of Vana's key innovations is its unique data management approach. Users' raw data will not be placed on the blockchain but will instead be stored in locations chosen by the users, such as cloud servers or personal devices, ensuring users have complete control over their own data.
5. Application Ecosystem: Based on data, Vana has built an open application ecosystem where developers can utilize the data accumulated by DLP to create various innovative applications, including AI applications, while data contributors can receive dividend rewards from these applications.

This design enables Vana to create a fairer data value distribution mechanism while protecting user data privacy, providing an important data foundation for the development of decentralized AI.

Latest development trends

Vana's financing and partnership expansion continues to advance:

• In February 2025, a certain company announced a strategic investment in Vana, and a well-known figure joined as an advisor.
• In terms of ecological construction, Vana has built multiple data projects covering various fields from social media data to financial prediction data, including: Finquarium (financial prediction data), GPT Data DAO (ChatGPT chat data), Reddit Data DAO (Reddit user data), Volara (Twitter data), Flirtual (dating data), etc.
• Recently, Vana organized a hackathon during Eth Denver, providing a high prize pool to incentivize developers to build DataDAO and AI applications based on Vana data, further expanding its ecosystem.

These developments indicate that Vana is actively building a complete ecosystem around data ownership and value realization, and its growth momentum is worth paying attention to.

Kite AI: Technical Breakthrough of AI-Native Blockchain

Kite AI is a native Layer 1 Blockchain project focused on the AI field, built on the Avalanche framework. It aims to address various challenges faced by traditional blockchains when handling AI assets, particularly how to achieve clear rights and incentives for AI data, models, and agent contributions. Kite AI proposes four core technological innovations:

1. PoAI Consensus Mechanism: Proof of Attributed Intelligence is a consensus mechanism pioneered by Kite AI, which accurately tracks the value contributions of data, models, and AI agents through an on-chain verifiable contribution record system. The project has designed a dynamic reward pool mechanism that distributes earnings according to contribution ratios, effectively addressing issues such as "data black box" and "model plagiarism" in the traditional AI economy.

2. Composable AI Subnet: Kite AI adopts a modular architecture, allowing developers to build industry-specific AI collaborative ecosystems as needed. For example, in the healthcare subnet, patient data can be encrypted and selectively authorized for pharmaceutical companies for AI model development, with profits distributed to data subjects, model developers, and subnet maintainers in a certain proportion, creating a win-win ecosystem for multiple parties.

3.AI Native Execution Layer: Kite AI is building an on-chain AI native execution layer specifically for handling AI computation tasks such as inference, embedding, and fine-tuning/training. Users can authorize smart contract wallets to perform inference calls and interact with models through this layer. This execution layer not only supports Blockchain transactions and state changes but also integrates confidential computing environments (such as Trusted Execution Environments TEE) to ensure data security and privacy protection during the computation process.

4. Decentralized Data Engine: Kite AI ensures that data creators receive fair compensation within the AI workflow. The platform includes compliance modules that adhere to regulations such as GDPR/CCPA, meeting data privacy requirements worldwide and reducing compliance costs for developers.

These technological innovations enable Kite AI to create a fairer and more transparent value distribution environment for AI developers and data providers, promoting the decentralized development of AI technology.

Development Status

Kite AI launched the incentive testnet on February 6, 2025, which is the first AI-native Layer 1 sovereign Blockchain testnet. The testnet performed brilliantly after going live:

• Less than 70 hours after the online test went live, the number of connected wallets has surpassed 100,000. So far, a total of 1.95 million wallets have joined the incentive test network V1, with over 1 million wallets interacting with the AI agent, and the total number of calls exceeding 115 million.

• The project background is strong, built by an experienced Silicon Valley team, with co-founders having deep technical leadership experience in the field of artificial intelligence and previously worked at several top tech companies. The core team members come from several industry-leading enterprises and have academic backgrounds from top institutions.

• In terms of capital support, the project has received investments from several top institutions and has established technical cooperation relationships with multiple well-known projects.

• As a selection committee member for a specific project, Kite AI plays an active role in promoting the development of the relevant artificial intelligence ecosystem, and this collaboration aims to establish the project as a leading Blockchain for AI applications.

• With the global data economy expected to exceed $70 billion by 2025, Kite AI is poised to become an important infrastructure for data rights confirmation and monetization, and its development potential is worth looking forward to.

Nillion: Pioneering Exploration in Privacy Computing

Nillion is redefining the way sensitive data is processed through its unique "blind computation" technology, paving new paths for future digital privacy protection.

Nillion is a decentralized public network based on an innovative cryptographic primitive called Nil Message Compute (NMC), allowing network nodes to operate in a non-traditional Blockchain manner.