GenLayer Product Update: Unlocking the Power of Intelligent Contracts

Welcome to the inaugural edition of the GenLayer Product Update! We’re taking you on a tour of the GenLayer platform, an AI-powered distributed ledger and digital decision-maker that enables trustless agreements and resolutions for smart contracts, AI agents, and organizations. GenLayer can be seen as a synthetic jurisdiction that can resolve contracts in minutes. This article is a deep dive “under the hood” of GenLayer, revealing the various technologies that make it work and our vision going forward.

Moving Beyond Deterministic Blockchains

Blockchains, by design, crave certainty. With traditional smart contracts, feeding the same inputs always produces the same outputs. That’s great for enforcing rules and preventing fraud, but it’s ill-suited for real-time, real-world information. Traditional blockchains can’t parse ambiguous data, interpret web content, or reason about subtle nuances. They run code - yet they can’t “think.”

GenLayer is changing that. We’re building what we call an “Intelligent Blockchain,” where smart contracts evolve into Intelligent Contracts, capable of reading real-world data, reasoning with natural language models, and making decisions beyond static code.

Intelligent Contracts: The Next Evolution of Smart Contracts

At GenLayer, Intelligent Contracts go a step further than typical smart contracts. They still run on-chain, remain self-enforcing and verifiable - but with AI-native capabilities:

  1. Access Real-World Data
    Instead of relying solely on oracles, Intelligent Contracts can query the open web and directly access the data they need.

  2. Leverage Language Models (LLMs)
    These contracts can parse text, understand nuances, and even interpret subjective or ambiguous instructions.

  3. Reasoning
    Natural language reasoning capabilities make contracts far more resilient to unforeseen future circumstances, enabling adaptation in the face of a changing world.  

GenVM: The AI-Powered Blockchain Engine

The heart of GenLayer is GenVM, our WASM-based virtual machine designed to handle non-deterministic operations while maintaining a decentralized ledger. Unlike other VMs that run purely deterministic code (like the EVM), GenVM has the following capabilities:

  • It Runs the Python Interpreter: Developers can build contracts in one of the world’s most popular programming languages for AI and machine learning. This aligns perfectly with a broad ecosystem of Python libraries and a community fluent in AI development.

  • Sandboxed Intelligence Environment: GenVM enforces deterministic behavior for standard logic while gating “non-deterministic” operations like LLM calls or external web queries. Each action is carefully logged and subject to on-chain validation.

  • Deep integration with the underlying ZK Chain: Re-use the vast set of EVM standards and libraries, and send messages and bridge assets to and from other chains - interact with GenLayer from wherever your application lives.

In short, GenVM seamlessly merges standard on-chain execution with the power of AI—opening up entirely new use cases unthinkable on traditional blockchains.

Optimistic Democracy: Reaching Consensus on AI

Running probabilistic or AI-driven code in a decentralized network raises a critical question: How do hundreds of nodes agree on a result if that result can be different each time?

Enter “Optimistic Democracy” Consensus

  • Small Group of Validators: When a transaction (or contract call) is submitted, a randomly selected committee of 5 validators executes it. One validator (the “Leader”) proposes the output.

  • Majority rules: Other validators then evaluate what the leader has proposed.  If a majority of validators are satisfied, the transaction is provisionally accepted. If not, they retry with a different leader until there is an acceptable result.

  • Appeals: In case anyone is unhappy with the provisionally accepted result, they can post a bond to start an appeal. This involves more validators to re-examine the transaction and settle on an improved result. 

This approach gives us the best of both worlds. Simple, uncontested decisions finalize quickly and cheaply, while complex or high-value decisions can involve more validators - ensuring fairness, trust, and security.

Our consensus is implemented in Solidity and runs on top of a ZKSync ZK Chain, part of the Elastic Network.

Leveraging the battle-tested ZKSync stack enables us to achieve high scalability and security and deliver great interoperability to our developers out of the gate. GenLayer can be called from and send messages to any other platform in the broader crypto ecosystem.

The Equivalence Principle: Defining “Subjective Truth”

Traditional blockchains demand exact matches: the output has to be identical for every node. But the real world is not black and white. Web pages constantly change every time you look at them. LLMs produce different answers to the same question - sometimes accurate, sometimes a hallucination.

The Equivalence Principle is a core part of how the Optimistic Democracy consensus functions, and lets developers define how the various validators in the network can check each other’s work. For instance, there are infinitely many ways to summarize an article. The Equivalence Principle ensures that an on-chain consensus forms around what really matters, the validity of the answer, not its exact string representation.

Validator Nodes: Guardians of Network Integrity

The GenLayer network consists of hundreds of validators, each connected to a potentially different LLM or even multiple LLMs. The GenLayer Node is the piece of software responsible for executing and validating Intelligent Contract transactions in the network.

It enables validators to stake, contribute to the network security, and earn rewards. The software maintains synchronization with the network, stores a database of the network state, and executes consensus duties such as proposing or validating transactions by connecting to the GenVM and ensuring its smooth execution.

The Node can also operate in syncing/archival mode, in which case it is not an active participant in transaction validation. It provides a JSON-RPC that dApp developers can use to query the state of any account on the network, simulate transactions, and estimate gas costs.

Validator Incentives and Security

GenLayer is secured through a Delegated Proof of Stake (dPoS) model. Anyone holding GEN tokens can stake (delegate) to a validator, earning rewards if that validator successfully processes transactions. Because those transactions may involve multiple LLM calls and real-time web data:

  • Rewards and Penalties: Leader Validators as well as validating validators are rewarded for producing good quality answers, and voting with the majority - they’re also punished vice versa. This creates a set of incentives for accurate resolutions of contracts that get better and better over time

  • Validators Need Quality AI: Sloppy or outdated models risk producing invalid answers and getting penalized. It keeps validators on their toes - constantly improving to stay competitive and accurate.

  • Diverse Models: No specific LLM is required or enforced. Encouraging validators to run different AI models makes the network more resilient to prompt injection attacks, “hallucinations,” or any single model’s biases.

  • Slashing: If a validator fails to respond timely or cheats in deterministic code execution, they will be slashed.

  • Greyboxing: Each validator pre-processes prompts to filter out adversarial text attempts, decreasing the chance of compromised results.

How Developers Can Get Started 

Beyond our core technology, we’re building a set of developer tools and applications that enable developers to easily and seamlessly build trustless applications that take advantage of GenLayer’s unique capabilities.

GenLayer Studio

The quickest way to get started is GenLayer Studio, a browser-based environment for coding, deploying, and testing your Intelligent Contracts.

  • Example Contracts: The Studio comes preloaded with a number of example contracts to help you get started

  • The Real GenVM: Write and debug Intelligent Contracts that will work seamlessly on the testnet and mainnet.

  • Live Interaction: Deploy and interact with your contracts, catch errors as they pop up, and inspect the state of your dApp. You can even connect a front end using the GenLayer JS library to build a full application.

  • Immediate Feedback: Watch live how a set of GenLayer validators execute the Optimistic Democracy consensus to produce a resolution. See the various LLM responses the different validators produce.

If you’ve ever wanted to explore GenLayer, the Studio is a quick way to start building your first Intelligent Contract: no local node setup or complicated dev environment required.

GenLayer CLI

The GenLayer Command Line Interface (CLI) is built for developers who prefer terminal workflows. It offers a streamlined way to create GenLayer projects and interact with the GenLayer network, whether you’re compiling contracts, deploying them, or sending transactions. 

It also enables you to run a local version of the GenLayer Studio, where you can control your own validator setup, run advanced tests, or even use it to host production applications before the mainnet.

It’s ideal for automating your development pipeline, managing deployments, and integrating GenLayer into existing backend systems.

GenLayer JS Library

For any TypeScript or JavaScript developers, either on the front end or the back end, the GenLayer JavaScript Library brings everything you need to interface with the network directly into your dApp. 

Whether you're fetching contract states, submitting transactions, or building interfaces around AI-powered decisions, the JS library offers a smooth, developer-friendly API. It bridges the gap between the blockchain and user experience. These tools ensure that developers, regardless of their stack or environment, can interact with GenLayer in the way that suits them best.

Potential Use Cases: Where Intelligent Contracts Thrive

  1. Decentralized Prediction Markets: Automatically fetch real-world events, like election outcomes or sports results, directly from any source on the web like news sites, and use them to resolve bets and prediction markets without humans in the loop.

  2. Dispute resolution: Complex or subjective agreements, previously requiring human arbitration, are resolved by decentralized AI validation, reducing cost and friction.

  3. Performance-based contracting: Systems that automatically reward participants upon the successful completion of predefined tasks, leveraging GenLayer's intelligent contract mechanisms.

  4. Parametric Insurance: Read weather data or news about natural disasters. If conditions meet pre-agreed triggers, claims are paid out near-instantly, without manual human verifications.

  5. AI-Driven DAOs: Proposals drafted in plain language can be parsed, interpreted, and even auto-enforced. No more friction from having to code every motion or rely on outside data providers.

  6. Autonomous Agents: “Smart bots” that operate on your behalf—managing subscriptions, negotiating deals, or enforcing legal agreements—now have a trustless environment to function in, 24/7, with minimal human oversight.

What's Next? 

  • Testnet Launch: We’re getting ready to open up GenLayer to the public. A testnet is on the horizon; stay tuned for details in the coming weeks.

  • Studio Enhancements: Improved debugging capabilities, simulation of advanced consensus scenarios, and other quality-of-life improvements.

  • More Developer Tools: We’re constantly expanding our set of developer tools to make building on GenLayer easier, faster and safer.

As we push toward a mainnet release, we’ll keep implementing and testing the various components that make up the GenLayer platform, ensuring it stays fast for routine tasks while robust enough for high-stakes decisions. We’re also actively onboarding developers to ensure GenLayer goes live with a vibrant ecosystem of novel applications.

Final Thoughts: Building a More Intelligent Future

GenLayer represents the next evolution in the blockchain: an AI-native, web-connected, non-deterministic system designed to handle the complexities of real-world data and subjective agreements. With Intelligent Contracts, we’re bringing autonomy, flexibility, and trust to every layer of decentralized AI.

Thank you for reading our first GenLayer Monthly Product Update! We hope this overview sparks your imagination about what’s possible when AI and blockchain truly converge. Stay tuned for more deep dives, announcements, and developer resources in next month’s edition.

Ready to Build on GenLayer?

  • Check out GenLayer Studio to experiment with Intelligent Contracts.

  • Read our Docs for step-by-step guides on deploying your first AI-powered dApp.

  • Join our Discord Community to discuss your ideas and get dev support.

Together, let’s shape the future of AI-native blockchains—one Intelligent Contract at a time.

About the Author 

Edgars Nemse, Co-Founder & CPO GenLayer Labs

Edgars Nemše is a technologist with over a decade of experience building and scaling software products across several industries, including AI, EdTech, and Crypto. He holds a Bachelor's degree in AI from The University of Edinburgh, was the CTO and Co-founder of StakeHound, product manager at RadixDLT, and analyst at a $8B Quant Hedge Fund.