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To the DeepNode community, Today's update continues our commitment to transparency, providing additional information on what has happened and the recovery plan moving forward. Backstory: - To ensure sufficient liquidity on Exchanges at launch, the DeepNode Foundation borrowed $ X mil USDT (at interest) from a Liquidity Provider, which was over-collateralised with Y% of DN's supply. - Those borrowed funds (in addition to other capital we contributed) were then provided to our Market Makers, along with a corresponding amount of DN tokens. - The collateral was held by a recognised third party trading firm. - This is the way things work with new projects. Teams must provide liquidity (stables and tokens) to Exchanges (via Market Makers) during a token launch if they are to be listed. What Happened: - The Liquidity Provider (bad guys) took our collateral (the DN tokens) and dumped them. They violated our contract, broke our trust, and we have the evidence to prove it. - Fearing an exploit/hack, our Market Makers (good guys) acted quickly and pulled liquidity from Exchanges until they could figure out what happened. - Between the good guys pulling liquidity and the bad guys relentlessly dumping into the void, price fell off a cliff. - Where things get strange is that the collateral was being custodied by a third party (a large and well known trading firm). We do not know why the Custodian  executed the instructions from the Liquidity Provider and are actively investigating the matter. Bad Guys Update: - Multiple sources have confirmed that the bad guys are out of tokens. - We are negotiating a settlement agreement with the bad guys for a return of funds (people become surprisingly communicative once exchanges start freezing assets). - Any funds that we get back from the bad guys will be used to provide market liquidity, tokens from these purchases will be permanently burned. Good Guys Update: - Market Makers, Exchanges and other partners are all aware of the situation, and want to help us right the ship. - The biggest reason that our Market Makers are able to help us rebuild is because they acted so quickly to pull liquidity when things hit the fan. What Next: - We are in the process of restoring liquidity and working with our partners to stabilize the market. - The process will be gradual, involving ongoing capital commitments from both the Foundation and several of our partners. - There are ongoing legal aspects to this situation, so while we do know who the bad guy is, and who the Custodian is, we are not able to share that information publicly at this time. In Closing: - To those that have continued to support us and show us grace through this difficult process, we thank you from the bottom of our hearts. - To those that are hurting right now, know that we are hurting right beside you. - We ask for your patience and understanding while our team and our partners are doing everything possible to try and make this right. We will continue to provide regular updates as we progress. Thank you, The DeepNode Foundation

Validators are the backbone of the entire $DN incentive mechanism: they secure quality, trust, and fairness by verifying miner outputs, enforcing model correctness, and ensuring every task meets network standards. Their role goes beyond simple checks. Validators validate models during onboarding, audit task results, assign trust scores, and continuously monitor node and model behaviour to maintain long-term integrity across the network. The incentive flow is very straightforward. Users submit tasks, miners perform the compute, and validators verify the results. If a task is approved, rewards are distributed to miners, validators, stakers, domains, and model owners. If validation fails, miner trust scores are reduced and tasks may be reassigned or penalized. Validators earn $DN for timely and accurate validations. Higher trust scores lead to more frequent validation opportunities and increased staking support, strengthening their role in the network. Stakers can delegate $DN to validators, earning a share of rewards while reinforcing economic security and decentralization. Fee routing and variable burn mechanisms further support sustainability through governance. We’ve already onboarded our first two validators: WildSage, who is supporting our testnet by helping run the infrastructure and providing all the necessary equipment, and Rizzo, one of the most trusted validators in the Bittensor ecosystem. In short: validators prevent manipulation, protect users from malicious outputs, preserve model integrity, and uphold the entire $DN incentive system. Without validators, decentralized AI execution simply doesn’t work.