On April 6, 2024, the much-anticipated Web3 Festival opened at the Hong Kong Convention and Exhibition Centre. DFINITY, as the leading sponsor of the event, saw its founder and Chief Scientist, Dominic Williams, deliver a speech titled “AI that is a smart contract: why and how” that delved into the operation of AI on blockchain networks, bringing DFINITY’s spearheaded project — the Internet Computer (IC) — back into the public spotlight.

Dominic Williams stated, “Traditional blockchains, such as Ethereum, this calculation can be completed in a single block. Transactions in the Internet Computer can extend the calculation to multiple blocks, which is very important for AI.”

Even before the conference, Dominic Williams had posted a video on Twitter demonstrating a fully decentralized AI Large Language Model (LLM) running as a smart contract on the Internet Computer. DFINITY is leveraging smart contracts on the IC to form a new matrix with AI, shaping a vision where AI becomes the heartbeat of the Web3 and blockchain world.

https://twitter.com/dominic_w/status/1770884845570326589

Basic Introduction

DFINITY, IC, and ICP

The DFINITY Foundation is a non-profit organization based in Switzerland, established by Dominic Williams in 2016. Its team includes world-leading cryptographers, mathematicians, and senior engineers, such as the inventors of BLS technology and Bitcoin ASICBoost, as well as researchers in multi-party computation and cryptography from Yale University and the European EPFL Centre for Distributed Computing. DFINITY’s vision is to create a decentralized internet ecosystem, breaking the monopoly of large tech companies over online services and data storage.

Developed, promoted, and maintained by DFINITY, IC is a public network designed to extend global internet functionalities and transform it into a world computer. With innovative blockchain technology, IC provides infinite scalability and high-speed transaction processing capabilities. It can also handle HTTP requests to support a wide variety of decentralized applications, from social media platforms, open-source project hosting services, to enterprise-level applications. Theoretically, any existing internet service can be rebuilt as a decentralized version on the IC.

There are two native tokens on the IC: ICP for voting governance, and Cycles for gas expenditures. IC employs a “reverse Gas” model where interacting with the chain does not require any Cycles from the user. Smart contract developers can convert ICP into Cycles to prepay for the gas of their smart contracts. Cycles are pegged to a basket of fiat currencies to ensure the cost for developers remains relatively stable. This model is akin to the Web2 mechanism whereby accessing services is free for users, with developers bearing the operational costs.

IC Architecture Overview

Smart contracts on the IC are known as Canisters, units that bind Wasm program code and data storage. Anyone can deploy Canisters on the IC.

The IC shards Canisters into multiple instances, each called a subnet, which possesses its own set of decentralized nodes. These nodes run a consensus algorithm amongst themselves, building their own blockchain. Canisters on one subnet can communicate with another Canister on a different subnet by sending messages. Users can also send messages to Canisters. Below is an illustration:

1. A message is sent to an RPC node;
2. The RPC node routes the message to the subnet hosting the target Canister;
3. The subnet’s consensus algorithm adds the message into the latest block of the subnet’s blockchain;
4. The message is then added to the input queue of the target Canister;
5. The Canister processes the message.

Subnets can vary in size, i.e., the replication factor, which determines the cost of running Canisters on that subnet. It also affects finality time and security.

Chain-Key Technology

One of the core technologies of the IC is the Chain-Key technology, consisting of threshold signatures, non-interactive distributed key generation, zero-knowledge proofs, amongst other cryptographic techniques.

Each subnet has a fixed public key. The corresponding private key is not stored on a single node nor available on any nodes. Instead, it’s split into multiple secret shares distributed across all nodes using threshold cryptography. Nodes can collectively sign messages from users and other subnets using these secret shares. This function means that state verification and result validation become extremely simple for users. It also eliminates the need to keep the blocks in the blockchain forever available, breaking the scalability bottleneck. In fact, the IC proactively garbage-collects old blocks to conserve storage usage.

Smart contracts can have their own keys and sign transactions for other blockchains (such as Bitcoin and Ethereum), allowing trustless interaction with other chains. In fact, IC has already integrated Bitcoin based on Chain-Key technology, with Ethereum integration also on the agenda.

The Past, Present, and Future of IC

Mentioning DFINITY and ICP, the phrase “launch is the peak” is a topic that cannot be avoided. On May 10, 2021, when the IC mainnet was launched, the price of ICP collapsed, with the price of a single ICP plummeting from over 450 USDT (even reaching over 2000 USDT on Binance) down by as much as 76%, and within a few weeks, the decline extended to 95%. The rapid fall in price greatly damaged the reputation of the DFINITY Foundation and also led to a series of attacks on the IC ecosystem from the crypto community, causing a catastrophe for ICP holders and communities that were building upon that network.

There is a view that ICP was subject to price manipulation by certain forces within a few hours of its listing (IC’s founder, Dominic Williams, has always believed it was the doing of SBF and FTX), I will not comment on this point of view, but looking at the work of post-disaster reconstruction of the IC ecosystem, IC has shown tremendous resilience.

Looking back on the development of IC in 2022 and 2023, IC has realized threshold ECDSA signatures, smart contract HTTP requests, direct integration with Bitcoin, and has sped up EVM compatibility, development of Ethereum cross-chain bridges, and DeFi. However, the most exciting development is that IC has truly embraced the era of AI. IC’s unique capability to support large-scale computations allows artificial intelligence and neural networks to run directly inside on-chain Canisters, not only running machine learning algorithms using popular AI/ML frameworks and libraries but also making API calls to external artificial intelligence application interfaces (such as OpenAI) through HTTP requests.

It is known that machine learning requires a significant amount of computational resources to run complex models, which ordinary blockchains are incapable of supporting for AI models to run directly within smart contracts. For example, a DeFi protocol provides users with a yield optimization model, but if one tries to run the model on-chain, they would have to pay exorbitant Gas fees. To counter such high costs, IC provides two key capabilities:

1. WebAssembly virtual machine: Canister code is compiled into Wasm modules to be deployed on IC, supporting standards such as the WebAssembly System Interface;
2. Deterministic time slicing (DTS): DTS splits the execution of very large messages that require billions of Wasm instructions across multiple execution rounds.

Moreover, IC is currently adding support for Web3 “AI compute units.” AI will also run on the network, supporting native Web3 integrations, and trustlessness combinations of models and data, completely opening up the imagination of AI + Web3.

In Conclusion: Aiming for Infinity

IC once boasted a team of dazzling cryptographers and idiosyncratic technology, crowned with the halo of “third-generation blockchain” — this was as “Behold — he is building a mansion”.

IC also at one point, with nearly 200 million dollars in heavy financing and top institutions vying for its favor, launched with a 230 billion-dollar FDV — this was as “Behold — he is holding a banquet”.

After IC’s token price collapsed during its launch, spiraling downwards to far below normal levels (going as low as 3 USDT) — this was as “Behold — his mansion now lies in ruins”.

There are stories in this world of gone with the wind, as well as tales of rise from the ashes. I believe that IC belongs to the latter. The ecosystem on the IC chain is still continually being built, particularly in the realm of AI, where IC has already shown its leading edge.

There are already many AI projects based on IC, such as Juno-OpenAI (https://github.com/peterpeterparker/juno-openai),,) which demonstrates the integration of OpenAI’s technology, including DALL·E and the GPT-4 Vision Preview, into a decentralized application (dApp) using Juno’s platform. It utilizes smart contracts to query OpenAI’s models, leveraging the efficiency and scalability of Juno’s serverless functions.

There are many more examples like Juno-OpenAI, highlighting that IC is opening up a new realm of possibilities for DApp developers in the era of AI, exploring the enrichment of functions and services offered by their applications with the aid of artificial intelligence and creating more interactive, personalized, and smart DApps.

It can be said that IC has now boarded the spaceship of the AI era, exiting the negative black hole, with a goal that is infinity.

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