A fresh startup named Nexus is tackling the pervasive problem of AI “hallucinations” by combining the power of artificial intelligence with blockchain technology. This initiative, originating from the layer-1 blockchain company Nuklai, is designed to consolidate information from various origins into a well-structured format, with the express purpose of enhancing the reliability and clarity of AI-generated responses.
AI models are increasingly recognized for a flaw: the tendency to generate inaccurate or entirely fabricated information, a phenomenon known as “hallucinations.” Research conducted by AI Foundations has revealed that a staggering 16 major AI engines exhibit hallucination rates exceeding 15%. Some models, such as Gemini 2.0 Flash and GPT 4.1, display particularly pronounced error rates. In a striking example, OpenAI’s o4-mini model demonstrates a concerning 79% error rate in its responses.
Nexus aims to rectify this issue through the deployment of a Model Context Protocol. This protocol meticulously gathers data from a variety of sources, including databases, individual files, APIs, and cloud-based services. Crucially, it allows users to trace the origin of each specific response. Matthijs de Vries, the founder of Nuklai, posits that while many current AI tools possess apparent intelligence, they often falter precisely when accuracy is paramount. Nexus seeks to deliver a solution by directly linking AI responses to their underlying data sources, thereby eliminating the occurrence of fabricated answers.
The Nexus project boasts backing from prominent entities within both the AI and cryptocurrency spheres, including IO.net, Filecoin, and Fetch. These strategic partnerships are designed to furnish the startup with access to robust AI models without the significant financial burden of establishing enterprise-level infrastructure. Tausif Ahmed, Chief Business Development Officer at IO.net, has highlighted the project’s overarching goal of leveraging decentralized inference to enhance the practical applications of AI, enabling developers to utilize powerful models without the complexities of managing intricate systems.
The market for crypto ventures tied to AI has experienced considerable expansion, climbing from $4.04 billion in mid-2024 to surpass $28.25 billion by July 2025, according to data from CoinGecko. Despite this substantial growth, the sector witnessed a correction, declining from a peak of nearly $17.5 billion in January 2025 to approximately $6 billion by July 2025. This volatility underscores the need for innovative solutions to foster stability and drive growth within the AI-focused crypto market.
At the heart of Nexus’s technical foundation lies NXSQL, a language meticulously designed to organize information into structured pools. This approach enables users to efficiently retrieve accurate and systematically arranged data from a diverse range of sources. While this modular and open design holds considerable promise, studies suggest that hallucinations are not solely attributable to disorganization or inadequate data access. Misinterpretations of user queries and an excessive emphasis on fluid and concise output, sometimes at the expense of factual correctness, remain significant challenges.
Notwithstanding these limitations, Nexus signifies a noteworthy advancement in the convergence of AI and blockchain technologies. The project’s integrated approach, combining blockchain infrastructure and AI models, reflects a growing trend of collaboration across different sectors. As partnerships expand and resources are shared more effectively, the integration of cloud computing, blockchain, and AI has the potential to pave the way for more efficient and reliable AI solutions in the years ahead.
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[1] https://coinmarketcap.com/community/articles/688a2b35c4e32d555c37fa6e/