The Integration of AI and Blockchain: In-Depth Analysis of Five Major AI Layer 1 Projects

With the rapid development of artificial intelligence technology, traditional Blockchain architectures struggle to meet the high-performance computing and complex data processing demands of AI applications. This has led to the rise of Layer 1 Blockchain platforms optimized specifically for AI, which exhibit diverse characteristics in terms of technical architecture, application scenarios, and business models.

This article provides an in-depth analysis of five leading AI Layer 1 projects: Bittensor, Vana, Kite AI, Nillion, and Sahara.

Bittensor: Decentralized AI Network Infrastructure

Bittensor, as an early explorer in the Blockchain AI field, is committed 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 earn corresponding rewards based on their contributions to the network.

Bittensor's technical architecture employs 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 Ecology: Each subnet is 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 balance the overall stability of the network with the expertise in 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 annotation.
• The number of active users has reached 140,000, doubling compared to the previous year.
• The total market valuation of the subnet 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 fund, adjusting its 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 upgrade of the dTAO (Dynamic TAO) system completed by Bittensor is a significant 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 distribution mechanism, allowing resources to flow more accurately to those subnetworks that truly possess competitiveness.

To address these issues, the dTAO upgrade introduces a dynamic resource allocation system based on market mechanisms. This system transforms each subnet into an independent economic unit, driving resource allocation through users' actual needs. 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 user's 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 each pool containing 1 TAO and 1 alpha token. As the liquidity of the two types of tokens in the subnet increases, the price of alpha tokens will also change accordingly. The emission of TAO is proportionally distributed based on the price of subnet tokens among all tokens. Subnets with higher prices will receive more TAO allocation, thus achieving automatic optimization of resource allocation.

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

The currently most active subnets include:

• Subnet 4 Targon: Focused on text generation AI inference services, characterized by fast response speed and low cost.
• Subnet 64 Chutes: Provides API interfaces for various LLMs, 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 annotation, encouraging users to earn tokens through data annotation.

Vana: Data Sovereignty and Value Reconstruction Platform

The Vana project focuses on addressing a core issue in today's digital economy: the ownership and value distribution of personal data. In the current internet ecosystem, users' data is mostly monopolized and controlled by large tech companies, while the users who truly 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 achieves the incentive, aggregation, and verification of data assets through the Data Liquidity Pool (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: Ensure that user data can be easily transferred between different applications and AI models, enhancing the flexibility of data usage.
3. General Connection Group: Track the real-time data flow within the entire ecosystem, forming a data ecological map to ensure the transparency of the system.
4. Non-custodial data storage: One of Vana's important innovations is its unique approach to data management. Users' raw data will not be placed on the blockchain but will be stored in locations chosen by the users, such as cloud servers or personal devices, ensuring 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 collaboration expansion continues to advance:

• In February 2025, YZi Labs announced a strategic investment in Vana, with Binance founder CZ joining as an advisor.
• In terms of ecological construction, Vana has built data projects covering multiple fields from social media data to financial forecasting data, including: Finquarium (financial forecasting 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, offering a prize pool of up to $50,000 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 development 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 that traditional Blockchains face when handling AI assets, particularly how to achieve clear rights and incentives for AI data, models, and agent contributions. Kite AI has proposed 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 allocates earnings based on contribution proportions, 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 on demand. For example, in the healthcare subnet, patient data can be encrypted and selectively authorized to pharmaceutical companies for AI model development, with revenues distributed to data subjects, model developers, and subnet maintainers according to a certain ratio, 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 designed to handle AI computing tasks such as inference, embedding, and fine-tuning/training. Users can authorize smart contract wallets to execute inference calls and interact with the models through this layer. This execution layer not only supports Blockchain transactions and state changes but also integrates a confidential computing environment to ensure data security and privacy protection during the computing process.

4. Decentralized Data Engine: Kite AI ensures that data creators receive fair compensation within the AI workflow. The platform includes compliant modules that adhere to regulations such as GDPR/CCPA, meeting data privacy requirements around the world 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 exceptionally well after going live:

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

• The project background is strong, built by an experienced Silicon Valley team. The co-founders all have deep technical leadership experience in the field of artificial intelligence and have worked for several top technology companies. Core team members come from industry-leading companies such as Google, BlackRock, Uber, and the NEAR Foundation, with academic backgrounds from top institutions like MIT and Harvard.

• In terms of capital support, the project has received investments from several top institutions and has established technical partnerships with Eigenlayer, Sui, Avalanche, AWS, and others.

• As a selection committee member in the Avalanche InfraBUILDL(AI) program, Kite AI plays an active role in promoting the development of the Avalanche artificial intelligence ecosystem, with the aim of establishing Avalanche 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: Frontier Exploration of Privacy Computing

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

Nillion is a decentralized public network based on an innovative cryptographic primitive called Nil Message Compute (NMC), which allows network nodes to operate in a non-traditional Blockchain manner. This project was established in November 2021 and aims to create a system that can securely handle high-value data without exposing sensitive details.

Nillion's core advantage lies in its "blind computing" capability------a process that allows data to remain encrypted throughout its entire lifecycle of storage, transmission, and processing. Its technical architecture integrates multiple cutting-edge privacy protection technologies:

• Multi-Party Computation ( MPC ): Enables multiple nodes to collaboratively compute a function without revealing their private inputs, achieving joint computation without data sharing.
• Fully Homomorphic Encryption ( FHE ): Allows direct operations on encrypted data, ensuring that the data remains encrypted throughout the process, providing end-to-end privacy protection.
• Zero-Knowledge Proof ( ZKP ): Provides a method for verification