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DeFi: Uniswap V4 and its new Hooks; Machine learning compute protocol Gensyn raises $43MM

Neuromancer, William Gibson's sci-fi novel, saw a future of decentralized networks, free from the constraints of concentrated power. The AIs were its alien gods.

Jun 15, 2023

Gm Fintech Futurists —

Today we highlight the following:

DEFI AND DIGITAL ASSETS: Uniswap Update & “Endless” Possibilities (link here)
PROTOCOLS: Blockchain-Based, AI Compute Protocol Gensyn Closes $43MM Series A Funding Round Led By a16z (link here)
CURATED UPDATES

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DeFi Short Takes

DEFI & DIGITAL ASSETS: Uniswap Update & “Endless” Possibilities (link here)

Uniswap is growing its capabilities with the launch of V4, the fourth major release of the world’s leading decentralised exchange (DEX). Uniswap accounts for approximately 48% of all DEX trading volume and has $3.9B in total value locked (TVL), or 9% of the total TVL ($43B) across all DeFi. This release builds on previous Uniswap releases dating back to its original launch in November 2018. V2 was released in May 2020 just in time to power the “DeFi Summer” wave, and V3 followed in March 2021 with much more sophisticated trading and market making tools.

With V4, Uniswap is focused on increased efficiency and customisability. There is a new type of smart contract, known as “hooks”, that allow developers to build their own features onto existing liquidity pools. An example is the creation of time-weighted average market makers, which allow for buy orders to be spread out over time, in effect providing automated daily cost averaging.

V4 also reduces gas transaction costs — Uniswap claims up to 99% cost savings — using “singleton” contracts and flash accounting, whereby all pools live within a single contract and are thus materially more efficient. Lastly, V4 introduces dynamic fee tiers, allowing pool creators to set fees at more competitive rates, drawing on the cost savings from the “singleton” architecture.

With Uniswap V4, developers can leverage the network effects and security of the Uniswap platform, and build on its new customisation capabilities, allowing developers to avoid building a custom automated market maker from the ground up. V4 opens the doors for AMM innovation across the community, acting as a testbed with significantly lower development requirements.

From a competitive standpoint, the launch of V4 comes after Uniswap V3 became open source in April and its Business Source License expired. Now anyone can freely copy the V3 protocol, commonly referred to as forking. V4 will not be forkable for some time, defending Uniswap’s position on the market. Notably, this caital markets engine rivals Coinbase in trading volume, showing the capacity of DeFi to match more traditional solutions.

👑 Related Coverage 👑

Food for Thought: Uniswap's V3 upgrade, the future of Automated Market Makers, and the financial compression algorithm

Lex Sokolin

March 26, 2021

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PROTOCOLS: Blockchain-Based, AI Compute Protocol Gensyn Closes $43MM Series A Funding Round Led By a16z (link here)

Gensyn, a proof-of-stake Machine Learning Compute Protocol, has raised $43MM in a Series A funding round led by a16z. The protocol enables users to provide their compute resources for developers creating AI tools. Data centers, desktops and laptops, and eventually smartphones will be able to contribute resources, allowing users to monetize idle compute power. Gensyn projects an 80% reduction in costs via its network, competing against the mounting costs of the likes of AWS and Google, as well as other machine learning infrastructure projects like TesnorFlow and PyTorch — important since GPU costs are one of the main barriers to AI scale.

At current growth rates, training costs could reach 1% of US GDP by 2031

The solution targets a key problem associated with utilizing unused compute power by verifying that the computational task has been executed properly by using a token-based cryptographic verification network model. While the approach is not yet public, we assume it follows principles from the original Gensyn litepaper.

The method comprises four participants: submitters, solvers, verifiers, and whistleblowers. Submitters initiate tasks and solvers execute AI model training. Once a Solver finishes a task, they record its completion on the blockchain and publicly share their “proof of learning”. Verifiers then retrieve verification tasks from a shared task pool, akin to the Ethereum mempool, and execute computational tasks to re-run specific proof segments and compute distances. Whistleblowers then use the output to validate the consistency between the verification and the proof in return for a reward.

The native token will be used in a staking and slashing mechanism, with actors staking tokens to participate under the threat of slashing their stake for malicious behaviour.

Gensyn Protocol is 80% Cheaper than AWS on-demand

The fundraise comes just a month after Nvidia reached a $1 trillion valuation, spurred in part by its chips being an integral component of AI system GPUs. Unlike its other embattled tech peers, Nvidia trades on 35x revenue — we are in an AI hype cycle and compute resources are increasingly in demand. For context, ChatGPT generated 1.8B visitors in April and other competitors like Google’s Bard or Bing AI have been gaining traction. As AI models become commonplace and grow in complexity, so will their computational demands. Companies like Gensyn, which try to use Web3 mechanism design to support AI growth, are of particular interest to us.

👑Related Coverage👑

Podcast: Powering the AI revolution from DeepDream to Dall-E, with Lambda Labs CEO Stephen Balaban

Matt Low

Jan 27

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Curated Updates

Here are the rest of the updates hitting our radar.

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Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

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