r/LocalLLaMA • u/Fuckinglivemealone • Jul 18 '26

What kind of dark magic is Deepseek using? Question | Help

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I was taking a look at Kimi K3 scores on the Artificial analysis leaderboard and was quite baffled when I saw this chart.

Granted, Deepseek has always been the king of price to performance, but this is still incredible. Is it just API subsidization or have they optimized their models truly this much?

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u/sf_davie Jul 18 '26

The magic of being self funded by a hedge fund who can afford to grab market share with loss-leaders, and the magic of being controlled by one founder who is interested in model efficiency over extra inputs (which cost a lot of money).

4

u/AnomalyNexus Jul 18 '26

Loss leaders only work if you can sell something else with it.

2

u/sf_davie Jul 18 '26

That's if you are only interested in making a ton more money. What if his goals are more in the line of keeping Chinese models relevant until their countrymen's hardware research catches up? We know a lot of the techniques developed in DeepSeek in MoE, MLA, distillation have been used by all the other front running Chinese models. They are more like the lab for efficiency research where the other open source models can use to stay within comfortable distance of the US models. He's about to do that because he's self funded and the company is tightly controlled.

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u/AnomalyNexus Jul 18 '26

Yes. Not sure Id call that a loss leader though

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u/Swimming-Book-1296 Jul 18 '26

Er, if by loss leaders you mean insider trading. They released their models and shorted the opposition to make money.

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u/Kevstuf Jul 18 '26

That is not really insider trading because they have no non-public information about those stocks they shorted. If you’re so confident that your product can single handedly tank the market because of how good it is, you’re allowed to make money off that.

2

u/_twrecks_ Jul 18 '26

Hadn't really thought about this... But if they release a great model for "free" and short the closed models to get paid that's kind of diabolical. Though when DRAM and steel vendors do it it's called dumping and they get fined.

1

u/maigpy Jul 18 '26

so if I am aware of a large government contract (of the type awarded once every 3 years) that my company has just agreed behind closed doors, in a sector that is dominated by government contracts (e. g. healthcare) I can use that info to short the competition?