Nexus Combats AI Hallucinations With Blockchain-Backed Transparency

A new startup, Nexus, has emerged with the ambition to address the persistent issue of AI hallucinations by merging artificial intelligence with blockchain technology. The project, developed by layer-1 blockchain firm Nuklai, claims to unify information from multiple sources into a structured format, aiming to enhance transparency and accuracy in AI responses [1].

AI models are increasingly being recognized for their tendency to generate incorrect or fabricated information, commonly referred to as hallucinations. A study by AI Foundations revealed that 16 major AI engines have hallucination rates above 15%, with some models like Gemini 2.0 Flash and GPT 4.1 exhibiting particularly high error rates. Notably, OpenAI’s o4-mini model has an error rate of 79% in its responses [2].

Nexus is designed to combat this by deploying a Model Context Protocol. This engine compiles data from various sources such as databases, files, APIs, and cloud services, enabling users to see the origin of each response. Nuklai’s founder, Matthijs de Vries, argues that most current AI tools appear intelligent but often fail when accuracy is most critical. Nexus aims to provide a solution by directly linking responses to their data sources and eliminating fabricated answers [1].

The Nexus project is backed by prominent names in both AI and crypto sectors, including IO.net, Filecoin, and Fetch. These partnerships are intended to provide the startup with access to robust AI models without the need for costly enterprise infrastructure. IO.net’s Chief Business Development Officer, Tausif Ahmed, emphasized the project’s goal of leveraging decentralized inference to improve AI’s real-world applications, allowing developers to access powerful models without managing complex systems [3].

The market for AI-related crypto projects has seen significant growth, rising from $4.04 billion in mid-2024 to over $28.25 billion by July 2025, according to CoinGecko. Despite this surge, the sector experienced a decline from a peak of nearly $17.5 billion in January 2025 to around $6 billion by July 2025 [4]. This fluctuation highlights the need for innovative solutions to stabilize and boost the AI crypto market.

Nexus’ technical foundation is built on NXSQL, a language that organizes information into structured pools, enabling users to retrieve accurate and systematically organized data from diverse sources. While this modular and open approach offers potential, studies indicate that hallucinations are not solely due to disorganization or lack of data access. Misinterpretation of user prompts and an overemphasis on fluent and concise output over factual accuracy remain significant challenges [5].

Despite these limitations, Nexus represents a notable step in the convergence of AI and blockchain. The project’s integration of blockchain infrastructure and AI models reflects a growing trend of cross-sector collaboration. As more partnerships and shared resources emerge, the integration of cloud computing, blockchain, and AI may lead to more efficient and accurate AI solutions in the future [6].

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[1] https://coinmarketcap.com/community/articles/688a2b35c4e32d555c37fa6e/