Mode launched the Synth subnet on Bittensor’s decentralized AI network on January 27, 2024, to predict crypto prices. Synth takes a broader approach than traditional price predictions, usually giving only a single forecast.
Synth Subnet Revolutionizes Crypto Price Forecasting Using Synthetic Data
Using Bittensor’s decentralized intelligence network, Synth creates highly accurate synthetic data for price forecasting. This new method captures all price movements and their likelihood.
As a result, it offers a clearer and more realistic model of how the market might behave. Given the unpredictable nature of cryptocurrency, with its big price swings, Synth aims to add value by providing a better understanding of potential market outcomes.
This is possible because factors such as volatility clustering and fat-tailed distributions are included. The subnet operates on a competitive model, where miners generate 100 simulated price paths for Bitcoin every five minutes.
Each miner is evaluated on how accurately they model the probability distribution of future prices and their ability to encapsulate realistic price dynamics.
Validators score them using the Continuous Ranked Probability Score (CRPS), which measures the forecasts’ calibration and sharpness against actual price movements.
Implications for Crypto
More accurate price forecasting could assist traders and investors in developing more sophisticated and effective trading strategies. Understanding potential price distributions could lead to more robust risk management practices.
Furthermore, Synth’s synthetic data could power a new generation of AI-driven financial applications, particularly in decentralized finance (DeFi).
Detailed probability distributions from Synth may revolutionize options for pricing models and portfolio management strategies in crypto.
However, ensuring the quality and reliability of the synthetic data generated may be challenging. While Synth plans to reward accuracy, the system’s performance will require monitoring over time.
As the project moves from testnet to mainnet and continues to grow, it has the potential to become a key resource for AI agents, options trading, and portfolio management in the crypto space.
Finally, the development underscores the growing importance of AI in the blockchain and cryptocurrency sectors.
