Can AI Make Software Unhackable?

Paulina Lewandowska

28 Feb 2023
Can AI Make Software Unhackable?

Introduction

The difficulty in ensuring software security and the frequency of hacking incidents underline the need for workable solutions. There is a rising need for creative ways to deal with these issues as cyber attacks become more sophisticated and prevalent. Software security can potentially be improved with the use of Artificial Intelligence (AI). AI is a valuable tool for strengthening software security because it can analyze data, spot patterns, and identify potential dangers in real-time. To properly incorporate any new technology into a complete security strategy, it's crucial to grasp both its strengths and limitations. This essay will examine how AI might enhance software security, its drawbacks, and the need of a comprehensive strategy for software security.

How AI Can Improve Software Security

AI can significantly improve software security by quickly identifying and thwarting assaults. Predictive modeling and other AI-based techniques for anomaly or intrusion detection are used to achieve this. Analyzing system behavior and spotting odd patterns that can point to an attack is known as anomaly detection. Machine learning methods are used in intrusion detection to find well-known attack patterns and stop them from doing damage. On the other side, predictive modeling makes use of previous data to anticipate potential hazards and actively counteract them.IBM and Microsoft are two well-known businesses that have effectively applied AI to enhance their software security. IBM uses threat detection and response systems that are AI-based, and Microsoft uses AI-based predictive modeling to find vulnerabilities before they can be exploited. These illustrations show how AI has the ability to improve software security and defend against online threats.

Limitations of AI in Making Software Unhackable

Despite the possibility that AI could enhance software security, it's critical to recognize its limitations. AI cannot ensure total security and cannot provide a complete solution to making software unhackable. With AI-based systems, false positives and negatives are a common problem that can cause normal operations to be classified as malicious or the opposite. However, human control and involvement are still necessary for AI systems to operate accurately and effectively. However, it's possible that AI-based systems could be breached or manipulated, creating security holes in software. As a result, even though AI has a significant impact on software security, this impact should be viewed in the context of a bigger, more comprehensive security strategy that takes into account a variety of aspects, including personnel training, program design, and routine upgrades.

Threats to Consider with AI-Based Software

AI-based software is not impervious to dangers and weaknesses, as is the case with all technologies. It's important to note that AI can be influenced or hacked. AI system flaws can be used by attackers to get around security and access private information. AI-based systems may also generate false positives or false negatives, resulting in security holes or pointless alerts. AI systems may also be biased, which occurs when the system generates unfair or discriminatory conclusions as a result of the data it was trained on. It's crucial to put appropriate security measures in place and often upgrade AI systems to fix any known flaws in order to counteract these dangers. The possibility of bias can also be reduced by making sure AI decision-making is transparent and equitable. Companies may guarantee the ongoing security of their systems and data by identifying and resolving the potential vulnerabilities posed by AI-based software.

The Importance of a Holistic Approach to Software Security

A holistic strategy that incorporates AI as one of several components is necessary to provide complete software security. Several aspects, such as employee training, program design, and routine upgrades, all have an impact on the security of software. These aspects should all be addressed in a comprehensive security policy. This entails training staff members about security best practices, such as password management and phishing awareness, as well as developing software with security in mind to obviate vulnerabilities and updating it frequently to fix known flaws. Companies can reduce their vulnerability to cyberattacks and guard against the compromise of critical data by adopting a comprehensive strategy. For instance, Google has a thorough security policy that includes multi-factor authentication, employee training, and routine software updates, which has assisted the business in preventing numerous high-profile attacks. Companies can keep ahead of changing cyberthreats and defend their data and systems from potential attacks by integrating AI with a thorough security strategy.

Conclusion

In conclusion, while AI has the potential to improve software security, it's critical to understand that it isn't a panacea. Software security requires a complete security strategy with a number of elements, including personnel training, program design, routine upgrades, and AI-based solutions. Companies can reduce their vulnerability to cyberattacks and guard against the compromise of critical data by adopting a comprehensive strategy. AI-based systems can identify and stop threats in real time, but they are not infallible and still need human supervision and intervention. Hence, rather than being considered a stand-alone solution, AI should be seen as a part of a bigger security strategy. Companies may improve their software security and keep up with new cyber threats by taking a comprehensive approach.

Do you want to get to know how to make the most of AI and GPT-like models? Check our last article here!

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Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Quadratic Voting in Web3

Kajetan Olas

04 Dec 2024
Quadratic Voting in Web3

Decentralized systems are reshaping how we interact, conduct transactions, and govern online communities. As Web3 continues to advance, the necessity for effective and fair voting mechanisms becomes apparent. Traditional voting systems, such as the one-token-one-vote model, often fall short in capturing the intensity of individual preferences, which can result in centralization. Quadratic Voting (QV) addresses this challenge by enabling individuals to express not only their choices but also the strength of their preferences.

In QV, voters are allocated a budget of credits that they can spend to cast votes on various issues. The cost of casting multiple votes on a single issue increases quadratically, meaning that each additional vote costs more than the last. This system allows for a more precise expression of preferences, as individuals can invest more heavily in issues they care deeply about while conserving credits on matters of lesser importance.

Understanding Quadratic Voting

Quadratic Voting (QV) is a voting system designed to capture not only the choices of individuals but also the strength of their preferences. In most DAO voting mechanisms, each person typically has one vote per token, which limits the ability to express how strongly they feel about a particular matter. Furthermore, QV limits the power of whales and founding team who typically have large token allocations. These problems are adressed by making the cost of each additional vote increase quadratically.

In QV, each voter is given a budget of credits or tokens that they can spend to cast votes on various issues. The key principle is that the cost to cast n votes on a single issue is proportional to the square of n. This quadratic cost function ensures that while voters can express stronger preferences, doing so requires a disproportionately higher expenditure of their voting credits. This mechanism discourages voters from concentrating all their influence on a single issue unless they feel very strongly about it. In the context of DAOs, it means that large holders will have a hard-time pushing through with a proposal if they'll try to do it on their own.

Practical Example

Consider a voter who has been allocated 25 voting credits to spend on several proposals. The voter has varying degrees of interest in three proposals: Proposal A, Proposal B, and Proposal C.

  • Proposal A: High interest.
  • Proposal B: Moderate interest.
  • Proposal C: Low interest.

The voter might allocate their credits as follows:

Proposal A:

  • Votes cast: 3
  • Cost: 9 delegated tokens

Proposal B:

  • Votes cast: 2
  • Cost: 4 delegated tokens

Proposal C:

  • Votes cast: 1
  • Cost: 1 delegated token

Total delegated tokens: 14
Remaining tokens: 11

With the remaining tokens, the voter can choose to allocate additional votes to the proposals based on their preferences or save for future proposals. If they feel particularly strong about Proposal A, they might decide to cast one more vote:

Additional vote on Proposal A:

  • New total votes: 4
  • New cost: 16 delegated tokens
  • Additional cost: 16−9 = 7 delegated tokens

Updated total delegated tokens: 14+7 = 21

Updated remaining tokens: 25−21 = 425 - 21 = 4

This additional vote on Proposal A costs 7 credits, significantly more than the previous vote, illustrating how the quadratic cost discourages excessive influence on a single issue without strong conviction.

Benefits of Implementing Quadratic Voting

Key Characteristics of the Quadratic Cost Function

  • Marginal Cost Increases Linearly: The marginal cost of each additional vote increases linearly. The cost difference between casting n and n−1 votes is 2n−1.
  • Total Cost Increases Quadratically: The total cost to cast multiple votes rises steeply, discouraging voters from concentrating too many votes on a single issue without significant reason.
  • Promotes Egalitarian Voting: Small voters are encouraged to participate, because relatively they have a much higher impact.

Advantages Over Traditional Voting Systems

Quadratic Voting offers several benefits compared to traditional one-person-one-vote systems:

  • Captures Preference Intensity: By allowing voters to express how strongly they feel about an issue, QV leads to outcomes that better reflect the collective welfare.
  • Reduces Majority Domination: The quadratic cost makes it costly for majority groups to overpower minority interests on every issue.
  • Encourages Honest Voting: Voters are incentivized to allocate votes in proportion to their true preferences, reducing manipulation.

By understanding the foundation of Quadratic Voting, stakeholders in Web3 communities can appreciate how this system supports more representative governance.

Conclusion

Quadratic voting is a novel voting system that may be used within DAOs to foster decentralization. The key idea is to make the cost of voting on a certain issue increase quadratically. The leading player that makes use of this mechanism is Optimism. If you're pondering about the design of your DAO, we highly recommend taking a look at their research on quadratic funding.

If you're looking to create a robust governance model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure that your DAO will stand out as a beacon of innovation and resilience in the long term.