Trust on a system level: Why Pallium is the future startup of artificial intelligence.

Pallium is a sponsored startup by the program Future Technologies (the Business incubator of the University ITMO). The co-founder of the startup, Anton Zhuravlev, provides an introduction to what the project is and why it’s needed.

Pallium is a startup that is developing a platform for the fast learning, safe storage and easy deployment of AI models in a decentralized environment. Pallium can be represented as a “school” where you can train your artificial intelligence model or provide it with data or computing power to train other artificial intelligence, in turn, receiving a reward. The reward is tokens that can be spent on training another model or withdrawn via exchanges. Today, Pallium is a resident of the accelerator program “Future Technologies – The Business Incubator” of ITMO university. Anton Zhuravlev explains the project and why it’s needed in society.

How did the project Pallium start?

I became interested in blockchain technology since the first time I heard about it back in 2016. I started reading about it on Wikipedia and bought the book “Blockchain: Blueprint for a new economy ” by Melanie Swan, and was surprised how much of an impact this technology has. At this point, my friend and I decided -like many in this industry- to start mining. This was the initial stage, where we attracted third-party funds and investments into our work. While the ICO theme appeared -a new economy was created-, I wanted to participate in this process. Our first project was trade-related, and it became the impetus for Pallium. At the time, we knew very little about artificial intelligence and its capabilities, but the idea was already formed. We then spent the next year studying the field and communicating with specialists, and through this, Pallium was created.

There are eight people in your team. How was the team created?

It all started with Alexey Sukhov, the General Director of the company. We’ve known each other for 10 years, as we both came from Yaroslavl. When we began developing this project, I’ve already been living in St. Petersburg for two years. In the beginning we had an unpleasant situation, as our first investor panicked due to the sharp decline Crypto had faced, and withdrew all his funds. At that time, we did not have contracts, and were literally on the verge of selling everything we had. While leaving the office, we met with the landlord, and he invested money in us, which saved our project. The rest of the guys are responsible for PR and marketing, which we hired after a long and hard search. Among them, for example, Fadi Albouni, which is responsible for working with the English-speaking audience. We also have the talented programmer from Innopolis Mikhail Lubinets, who is now completing his training.

Recently you became the winner of the pitch-session with the Japanese experts, and then went to Minsk on the Blockchain & Bitcoin Conference, where you presented your project and won first place. Now you will compete for $120,000. Tell us about this experience.

We took first place at the conference “Japan – The Land of the Rising Sun” and had the opportunity to go there to present the project in a new market. We were pleasantly surprised! Usually we present the project at conferences in front of investors and look for advisors who can help us with their expertise in areas such as blockchain, artificial intelligence, law, distributed computing systems, the design of programming languages, big data and so on. We also participated in a conference in Minsk, where we also took first place. This victory gave us the opportunity to compete for $120,000 from the Pulsar Venture Capital fund, which held its own ICO and collected $15,000,000. Now the foundation is looking across Russia for startups. The best will receive investment and development opportunities. For this money, we’re flying to Kazan in April.

In addition, last Saturday was the Global Blockchain Summit conference in Sochi, where we competed for the opportunity to go on a road show in China. A trip to China for startups is extremely valuable, as it’s believed that if you appeal to Chinese investors, you’ve secured your future. Participation in such conferences provides great opportunities to surround you with new professional connections, to announce their project to the whole world and attract funds that are not just venture money (ICO – a fundraiser to the whole world, where people who are interested in the project can fund it and invest in it). Money raised will be in millions of dollars, sometimes in minutes. Therefore, it is crucial for us to declare ourselves at such events.

And what is the project itself about?

In fact, we’re making a decentralized (not belonging to one organization, but belonging to all participants) network: anyone can become a member, support it and make money on it. This network is created as a kind of environment in which machine algorithms can interact with each other and the outside world (that is, with people) completely autonomously, where they can learn, work, and transfer values in the form of crypto currency and knowledge. The particularity of the system is that it is built on agents. According to the definition of the international organization FIPA (Federation of Intelligent Physical Agents), an agent is an agent is an entity that is located in a certain environment from which it receives data and that reflects events occurring in the environment. If we consider a person an agent, we perceive the world through senses, interpret it and act on it with our body parts. If we’re talking about a software agent, it can be a program that accepts some incoming data, processes it and sends the result back. The intellectual agent can be referred to as an entity that has an internal decision-making system. With the possession of such a system, if an environment influences you, you make a decision on how to react to a situation, and you put this decision into action. A scoring system that analyzes your financial situation and, based on its decision-making system, approves or disapproves of your credit may also be referred to as an intellectual system. In fact, practically everything we interact with in everyday life can be put into the concept of “Intellectual agents”.

Have you seen the agent-oriented approach somewhere else?

Despite us seeing the agent-oriented approach before, it’s never been implemented in the way Pallium has. There is a problem that many experts aren’t aware of. The fact is that artificial intelligence has densely entered people’s mass consciousness: headlines are full of AI’s new achievements in all aspects of life, especially in cars. So AI is winning Pro games, diagnosing diseases better than doctors, predicting financial markets, driving cars autonomously, writing proper music, giving us recommendations on where to go, telling us what to buy, etc. Achievements in the field of artificial intelligence encourage organizations and states to invest significant resources in the industry, thus helping it advance. However there’s a question on many people’s mind, can we trust artificial intelligence enough to integrate it into our lives?

The problem is that the algorithms on which the agent makes its decisions are usually hidden from us. Therefore there is a possibility that it can act with bias, which can be intentionally built-in or not. Mathematician and analyst Cathy O’Neil proves in his book “Weapons of math destruction” that algorithms always have a hidden bias and reflect the ideology of their creators. The simplest example would be an algorithm that interviews people for a job. However, the machine denied the person without a reason, in other words, discriminated against him. The question is on what basis did it discriminate against him? In closed systems it’s impossible to understand how this happened.

In turn, if we consider the blockchain an environment for the existence of such intelligent agent, the principle of transparency is inherent in the technology, and thus can to some extend neutralize the issue. We can always check what is inside the agent, trace the history of its changes, and make sure that the agent acts according to its current state and in no other way. In a global sense, it is a system of trust in an environment where no one trusts anyone – such a regulator.

On the project’s website you mention that there are few audiences that can use project, for example AI-developers. Can you make an example?

If you are an algorithm developer (in this case agents), you create the agent and write a smart contract for it. A smart contract contains the terms of agreement between the agent and the environment, as well as the process of changing its internal decision-making system, like the agent, the contract that specifies the structure of incoming data, not to study in another data structure, its decision-making algorithm will not change suddenly, the range of effects on the environment will remain unchanged. The developer loads the agent into the network, the agent in turn, can immediately learn from computing resources of the network members, which saves developers money, not everyone has global tasks – someone just needs to run something, test, and so on. All this can be done here and saved in a decentralized network.

For instance, let’s imagine the interaction of to agents outside of the blockchain. There is an agent called agent A which exists somewhere on the creator’s server. Suppose this agent predicts the price of Bitcoin and gives a signal to buy or sell. On another server there is Agent B, which on the basis of a signal from Agent a makes a deal on the exchange and pays him for these signals. Because these agents operate completely autonomously, their interactions face threats. The Creator of agent A, without notifying other members, can change its state, change the decision-making algorithm, or even start predicting Ethereum prices. As a result, agent B will receive an incorrect incoming signal and its owner will incur losses. In turn, Agent B may not pay agent A for the signals. Of course, the creators of the agents can specify the conditions, make a contract, but we are talking about a full Autonomous operation without the intervention of third parties in an environment where participants are often anonymous.

Using the capabilities of blockchain and smart contracts, we can draw up a smart contract between these agents and nullify conflict situations. All this makes it possible to transfer values between agents in the form of tokens. Agents can learn from each other, become more efficient, and work offline.

How can miners use the network?

Miners are people who support the blockchain system and are actually engaged in block confirmations in the blockchain. Today, there is a noticeable trend of crypto currency transition from the algorithm of consensus Proof-of-Work (PoW) to Proof-of-Stake (PoS). This means that you no longer need huge computing resources to prove that you have the right to write to the blockchain. Accordingly, now the computing resources of $ 60 billion are concentrated in the hands of miners (these are both large data centers and just private laptops). On average, last year miners earned two dollars per day from one video card, however, if this video card trained artificial intelligence in accordance with the Amazon’s cloud service, they would receive two dollars per hour. That is due to the fact that processing artificial intelligence is much more profitable than mining crypto currency. Given that the main crypto currency for mining on video cards is Ethereum and it is going to switch to Proof-of-Stake, miners will remain idle, and it will be necessary to switch the power concentrated in their hands somewhere. When the benefits of mining disappear, these video cards will not sell anywhere. Now they are easy to sell because they are in demand, but then they will not be needed, here’s where our network is useful. Miners can connect to our network and use their equipment to train AI models, and they will receive a reward from people who are interested in this training. A certain environment is created where people can interact directly without intermediaries, because even we cannot influence the network; change anything in it without all members of the network coming to an agreement.

Why do data providers and organizations need this network?

Agents need data to be trained, and they need a lot. On one hand, there is a problem of lack of data. On the other hand, there are organizations that have this data. Let’s say a specific plant collected characteristics of metals in 1979. It has this data stored but it’s not being used. It turns out there are people who could benefit from this data and tools. So data that are not in use can be useful in our system as it will be possible to link interested parties to owners of this data and allow them to sell it.

Organizations, in turn, can buy these agents. Let’s say Alice wrote a tough agent that does a credit scoring. The Bank, which is interested in such an algorithm, connects, pays the agent, loads its data there, and the agent solves the problem. The money is sent to Alice, and the Bank receives a decision on the loan.

In what stage is the project now?

Right now we have an MVP in which agents are considered a factorial number, but does so through a smart contract that runs in our developed virtual machine and our computing network will be released in a future prototype. The alpha version is scheduled for release in four months; it’ll be a test network, which will be fully under our control. This means it won’t be mass tested. Currently we’re negotiating with companies that are interested in testing this technology in a closed mode. We want to launch a working version in a year. The entire road map is on our website. In April, our pre-ICO will be launched, on which we plan to raise 500 thousand dollars to create a product that can be “touched”.

How do you plan on making money through the platform?

We plan on doing so through token ownership; we have 2 kinds of our own pool of team. PLMT tokens were created to raise funds; they are available on the Ethereum blockchain platform. The other currency is SPIKE. It regulates the relationship between the platform participants. Tokens can be bought on the stock exchange, and all operations will be carried out through their use. This removes a lot of intermediaries, reduces prices by dozens of times for the end user and creates a kind of internal economy that supports the project. The life of the network is a system of motivation for people.

We also connect our computing center to mining and earn the same as all the participants of the network. So far, the question remains as to the percentage of each transaction. If he’s going to be, it’s the minimum for the maintenance of the state.

We’re also connecting our computing center to mine and earn the same as all the participants of the network. So far the question remains as to the percentage of each transaction. If it’s going to be it’ll be the minimum amount for the maintenance of the network.

Russian law does not regulate the area in which you work. Meanwhile, Pallium’s website says that the company is registered in the jurisdiction of Estonia. What’s the reason behind this decision?

In Russia, this area isn’t well regulated, which creates certain difficulties, because you don’t know what to expect. We would be happy to arrange everything here, because there are companies that conduct ICOs in Russia, but we do it in the European jurisdiction because it is a more secure way. Fact is not many people don’t understand what crypto currency is and how to regulate it at all. Let’s say I’m an investor and I want to buy tokens that you’ve released. I can buy them, but I can’t do the accounting of purchased assets. For example, if a company buys shares, it can indicate that it has acquired five shares for 100 rubles, and the company becomes the owner of these shares. With tokens you can’t do that because in Russian law there is no definition of what a token is. In Europe, the situation is somewhat different. For example, in Germany, crypto currency is recognized as a legal means of payment and in Estonia we can simply link a crypto currency account to our organization with our balance, and tokens will be considered our digital assets. In Russia there is talk regarding the legalization of crypto currencies, we’ll just have to wait and see.

You are residents of Future Technologies, but Pallium is not the most standard startup for the acceleration program, which means techniques that work for other startups may not work for you. What is the main challenge?

This is true. I will begin, perhaps, with the pros, which are the constant self-assessment and the external level of preparation. We’re constantly speaking at conferences and understanding that this level of training is important. However, it is difficult for the public to perceive the idea and the product. This has created an obstacle for our team; we quite often had to defend the idea to turn the minds of people. For example, we are required to have a financial model, but we cannot describe it, because the network does not belong to us. That is, classical methods do not suit us. They do not suit everyone who works with decentralized systems. With projects tied to decentralized networks, we need to work differently, but now the community only develops the necessary tools.