AI and Crypto Convergence Aims to Address High Error Rates in AI Models
Artificial Intelligence (AI) has been instrumental in transforming numerous sectors. Yet, it’s not without its challenges. A staggering 80% error rate plagues newer AI engines, brought about by what is referred to as ‘hallucinations.’ These hallucinations cause AI engines to generate answers out of thin air. Interestingly, a potential solution on the horizon involves the merger of AI and cryptocurrency technologies.
AI Hallucination Problem
Studies have demonstrated that AI models exhibit a tendency to hallucinate, with certain models like OpenAI’s o4-mini model having an error rate as high as 79%. This is a significant issue, especially considering the vast number of queries these models process. When AI models hallucinate, they generate data that is not grounded in reality, leading to errors and inconsistencies.
In June, an investigation by AI Foundations revealed that 16 AI engines had hallucination rates exceeding 15%. The most affected were Gemini 2.0 Flash and GPT 4.1. Given the pivotal role that AI plays in data analysis and predictive modelling, such enormous error rates pose serious challenges.
The Nuklai Solution
In a bid to tackle this problem, a layer-1 blockchain startup, Nuklai, is developing an AI engine named Nexus. This novel project has attracted the backing of prominent AI and crypto industry players, including IO.net, Filecoin, and Fetch. Nexus aims to address bias, errors, and other inconsistencies in AI models by harnessing resources both from on-chain and off-chain.
The new AI engine leverages the unification of different types of data into one format, bolstering its ability to handle and manage data. This move signals Nuklai’s attempt to mitigate the high error rates associated with AI hallucination.
The State of the AI Cryptocurrency Market
According to data from CoinGecko, AI Agents significantly contribute to the AI crypto sector, a part of the market with a cap of $28.25 billion. Although this may seem meagre alongside the wider cryptocurrency market’s $3.7 trillion cap, it puts forward a significant potential for growth.
Between mid-2024 and 2025, the AI crypto sector underwent a seven-fold increase in market cap, growing from $4.05 billion to over $28 billion. Specifically, the market cap for AI Agents peaked at nearly $17.5 billion in January 2025. However, by July 2025, it had dropped to a little over $6 billion, implying a need for resurgence in the sector.
Nexus, A Novel Approach
Nexus stands out with its innovative approach to leverage blockchain technology and AI. The project is embarking on building an extensive network of over 80 partners in both the AI and crypto sectors, which includes IO.net, Fetch, and Filecoin. This partnership network will grant Nexus access to powerful models without the need for expensive enterprise APIs or managing infrastructure.
Nuklai aims to use Nexus as a tool to significantly decrease AI’s hallucination problem. By providing users with explanations of how the results are generated, Nexus ensures that users can trust the information derived from AI systems.
Overcoming the Hallucination Problem in AI
While Nexus brings a promising solution to the fore, it’s crucial to remember that the challenges with AI are multifaceted. Issues not confined only to hallucinations. Misinterpretation of users’ prompts and outdated training data are also chief concerns in the AI landscape.
Nevertheless, Nuklai remains optimistic in Nexus’s potential to address these problems significantly. By its agnostic AI system that accommodates all major LLMs and does not stick to specific vendors, Nexus brings forth significant potential to transform the AI landscape run by blockchain.
In conclusion, player-1 startup, Nuklai, through its innovative Nexus project, showcases how AI and blockchain can be harnessed together to tackle significant challenges in the AI space. While much work is still required, this emerging collaboration heralds an exciting future with an increasing fusion of cloud computing, AI models, and blockchain.
