Authors: Luke Leasure & Nick Carpinito
Compiled by Deep潮 TechFlow
DeepChaotrend Summary: Nockchain’s Logos upgrade integrates AI inference directly into proof-of-work, aiming to allow the same computational power to generate revenue from customers while also earning blockchain rewards—a bold experiment for miner income and public chain security budgets. However, the first paying customer comes from the founder’s own company, raising questions about audit independence, and it remains to be seen whether the flywheel can truly gain momentum. Actual AI inference demand and token performance following tomorrow’s upgrade are worth close attention from crypto investors.
GM, have a great Thursday! Following Wednesday’s 0.1% month-over-month increase in CPI, equities have continued to outperform cryptocurrencies, a trend that persists, while ETF fund flows reflect modest optimism. Below, we dive into tomorrow’s Logos upgrade on Nocturne Chain and the next evolution of useful proof-of-work.
On Wednesday, the CPI rose 0.1% month-over-month, in line with the median expectation and rebounding from a 0.4% decline the previous month. Housing prices contributed about two-thirds of the monthly increase with a 0.1% change, while energy prices fell another 1.5%, primarily driven by a 2.9% drop in gasoline prices. Overall, this data is unlikely to alter the Fed’s interest rate trajectory. On the same day, traditional markets outperformed cryptocurrencies, with the Nasdaq rising 0.56%, the S&P 500 up 0.23%, and crypto-related stocks performing even better, gaining 2.19%.
BTC underperformed, declining 0.25%, with most of the crypto indices we track performing even worse. Stocks outperforming tokens remains a persistent theme. The perpetual contracts sector was the biggest gainer, rising 3% driven by HYPE’s strength, while the decentralized exchange sector was the biggest loser, falling 4.7% due to UNI’s weakness, offering little signal in terms of sector rotation direction.
BTC ETF fund flows have shown a slight shift in trajectory. Periods of modest accumulation have been interrupted by single-day outflows, mirroring the weakness in BTC’s daily price movement. Since early July, net inflows have remained positive, indicating a gentle return of market optimism toward these products and a clear reversal from the significant outflows seen in May and June. If this trend continues, the gradual re-accumulation of positions by these ETFs should provide downward support for BTC.
Earn double rewards with computing power
Making proof of work do something useful is not a new idea. Bitcoin miners burn hash power with no other output. Reasoning service providers sell GPU time to customers. Tomorrow, at block height 126000, Nockchain’s Logos upgrade will go live, and this divide will no longer exist.
In addition to the original ZK proof-of-work, Logos introduces a second mining puzzle: integer matrix multiplication, a core operation in AI reasoning, with an independent difficulty target. Upon activation, the network allocates 30% of block rewards to the AI puzzle and 70% to ZK-PoW. Miners perform matrix multiplication; if the result meets the target, the miner wins the block. When this computation is also performed for paying inference clients, the same computational effort becomes a lottery ticket for block rewards.
The founder of Nockchain describes this as a security budget that expands with the growth of the AI economy: as demand for inference increases, more GPUs are directed toward this chain, raising the cost of attacking it. However, this claim relies on demand that has not yet materialized at scale. Nockchain needs paying inference customers to turn the flywheel, and its founder has separately established a company, National Compute, to provide the first customers. This company authored the Logos proposal and conducted an internal audit, meaning the protocol’s largest upgrade originated from the same individual as its first anchor client.
This launch comes just weeks after Zorp shut down. Zorp, the research company that developed Nockchain, has transferred its trademarks and code repositories to Nock Community Co., a non-shareholding entity that manages 20% of the protocol fund. Logos is the first upgrade to follow the new structure’s established process: public testnet, third-party cryptographic audit, a vulnerability bounty of up to 1 million NOCK, and a pre-announced activation height. The dual-puzzle code ran on the public testnet for 20 days before being merged into mainnet.
Two aspects warrant cautious scrutiny. The activation height has been revised multiple times: from 114,300 at the end of July, to 122,000 after the testnet, and then to 126,000 on Friday—each adjustment introduces uncertainty inherent in resetting the launch target. The security argument relies on a puzzle with no prior track record. Nockchain previously patched a trace-reuse mining vulnerability at block height 119,400 via the Zoe upgrade in early August, reminding us that the proof mechanism is still in its early stages, even though this fix did not alter the ZK scheme or affect anything beyond block reward capture. The AI puzzle itself also raises reliability concerns, which is precisely why audits and bounties are being implemented.
NOCK is trading near $0.009, with a market cap of approximately $22 million and a fully diluted valuation of around $41 million—just a fraction of the attention it garnered during its fair launch last spring. For holders, Friday’s mechanism matters less than whether National Compute can drive sufficient paid inference traffic through its compute cluster to turn the “security as revenue” narrative into cash flow. Nockchain has already delivered the harder engineering work; the market it needs has yet to be built.