By

Dimsumdaily Hong Kong

Sat April 26, 2025

26th April 2025 – (New York) The crypto industry has been striving to penetrate the booming artificial intelligence sector, yet blockchain companies have often faced challenges in making significant inroads. This situation may be changing with Nous Research, a decentralised AI startup leveraging the Solana blockchain to train its open-source models.

After operating largely in the background for two years, Nous has emerged with a remarkable $50 million Series A funding round, primarily backed by crypto venture capital giant Paradigm, which confirmed the investment amount to Fortune.

This funding round values Nous at a token valuation of $1 billion, according to a source familiar with the details who spoke to Fortune on the condition of anonymity. Previously, Nous raised around $20 million in seed funding from investors such as Distributed Global, North Island Ventures, and Delphi Digital.

Unlike many blockchain and AI projects that originated from crypto-focused startups, Nous was founded by a group of AI researchers who recognised the potential of blockchain technology for coordination and incentivisation. Their goal is to develop open-source models that can compete with established entities like OpenAI and DeepSeek, although Nous remains in the early and experimental stages. A distinctive feature of their approach is the intention to train models in a distributed manner, utilising spare computing power from individuals worldwide.

“We very much came from a mentality that we want to create and serve the world’s best AI,” stated co-founder Karan Malhotra in an interview with Fortune.

Founded in 2022, Nous is described by Malhotra as an open-source research organisation formed by volunteers who connected through social media and platforms like Discord and GitHub. They began by modifying existing large language models, such as Meta’s Llama and Mistral, releasing a series of models under the name Hermes that gained traction within the open-source community.

The team has also published research on extending model memory, which has been referenced by Meta and DeepSeek, as well as proposals for training models using non-colocated GPUs. Collaborating with Diederik P. Kingma, a member of the OpenAI founding team, Nous has developed a method for training open-source AI models that allows individuals to contribute their idle computing resources, potentially transforming the resource-intensive training process.

Malhotra highlighted that blockchain technology is integral to fostering participation. “We think of the incentive mechanism behind crypto to push people to actually utilise their idle compute less as a donation but more as a transaction,” he explained, noting that the crypto layer is essential to deter bad actors in a distributed training framework.

Despite the AI community’s general scepticism towards crypto, Malhotra described Nous’s founding team as “crypto native,” albeit cautious about incorporating blockchain until their research breakthrough. “We don’t want to get bogged down by the traditional view of how crypto operates when we’re a very serious research lab,” he added. “But this is really the only way we can make such a massive training run and such a democratic thing possible.”

Paradigm, founded by Coinbase’s Fred Ehrsam and Sequoia’s Matt Huang, is one of the largest crypto-native venture firms, recently closing an $850 million fund. Following the collapse of its portfolio company FTX in late 2022, the firm has indicated a shift towards AI-focused investments while still maintaining its commitment to crypto.

Nous represents Paradigm’s most significant investment in the AI sector, although the firm previously invested in Vana, which facilitates data pooling through decentralised autonomous organisations (DAOs). “This open, community-oriented approach is a powerful contrast to the closed, centralised efforts from incumbent labs,” noted Paradigm partner Arjun Balaji.

Nous plans to launch its decentralised training system on the Solana blockchain. While the team is actively developing the product, Malhotra did not disclose a timeline for its launch. The startup is also considering whether to reward users with a proprietary token or Solana’s native cryptocurrency.

With a team of around 20, much of the new funding will be allocated to enhancing computing power and expanding research capabilities. As the AI landscape evolves, Nous stands out as one of the first serious projects to embrace blockchain technology. “It’s quite clear to me that the ideals of open source and the crypto ethos are extremely aligned,” Malhotra concluded, highlighting the importance of transparency and individual recognition in this innovative endeavour.