Creating a Human-like Chatbot: A Step-by-Step Guide to Training ChatGPT

Paulina Lewandowska

27 Jan 2023
Creating a Human-like Chatbot: A Step-by-Step Guide to Training ChatGPT

Introduction

It's difficult to create a chatbot that can have appropriate and realistic conversations. The GPT-2 model, which stands for Generative Pre-training Transformer 2, has been refined for conversational tasks after being trained on a vast amount of text data. In this post, we'll go through how to train a ChatGPT (Chat Generative Pre-training Transformer) model so that it may be adjusted to comprehend conversational cues and respond to them in a human-like manner. We'll go into detail about the crucial elements in this approach and how they help to produce a chatbot that can have conversations that flow naturally.

How ChatGPT was made?

ChatGPT is a variant of GPT (Generative Pre-training Transformer), which is a transformer-based language model developed by OpenAI. GPT was trained on a massive dataset of internet text and fine-tuned for specific tasks such as language translation and question answering. GPT-2, an advanced version of GPT, was trained on even more data and has the ability to generate human-like text. ChatGPT is fine-tuned version of GPT-2 to improve its performance in conversational AI tasks.

Training ChatGPT typically involves the following steps:

Collect a large dataset of conversational text, such as transcripts of customer service chats, social media conversations, or other forms of dialog.

What to bear in mind while doing this?

  • The dataset should be large enough to capture a wide variety of conversational styles and topics. The more diverse the data, the better the model will be able to handle different types of input and generate more realistic and appropriate responses.
  • The data should be representative of the types of conversations the model will be used for. For example, if the model will be used in a customer service chatbot, it should be trained on transcripts of customer service chats.
  • If possible, include a variety of different speakers and languages. This will help the model to learn how to generate appropriate responses in different contexts and for different types of users.
  • The data should be diverse in terms of the number of speakers, languages, accents, and cultural background.
  • Label the data with the context of the conversation, such as topic, intent, sentiment, etc.
  • Be sure to filter out any personal information, sensitive data, or any data that could be used to identify a person.

Preprocess the data to clean and format it for training the model. This may include tokenizing the text, removing special characters, and converting the text to lowercase.

A crucial part of training a conversational model like ChatGPT is preprocessing the data. It is beneficial to organize and clean the data so that the model can be trained with ease. Tokenization is the act of dividing the text into smaller parts, like words or phrases, in more detail. This assists in transforming the text into a format that the model can process more quickly. An application like NLTK or SpaCy can be used to perform the tokenization procedure.

Eliminating special characters and changing the text's case are further crucial steps. Converting the text to lowercase helps to standardize the data and lowers the amount of unique words the model needs to learn. Special characters can cause problems while training the model. In data preparation, it's also a good idea to eliminate stop words, which are frequent words like "a," "an," "the," etc. that don't have any significant meaning. It's also a good idea to replace dates or numbers with a specific token like "NUM" or "DATE" when preparing data. In data preparation, it's also a good idea to replace terms that are unknown or not in the model's lexicon with a unique token, such as "UNK." 

It is crucial to note that preparing the data can take time, but it is necessary to make sure the model can benefit from the data. Preprocessing the data makes it easier for the model to interpret and learn from it. It also makes the data more consistent.

Fine-tune a pre-trained GPT-2 model on the conversational dataset using a framework such as Hugging Face's Transformers library.

The procedure entails tweaking the model's hyperparameters and running several epochs of training on the conversational dataset. This can be accomplished by utilizing a framework like Hugging Face's Transformers library, an open-source natural language processing toolkit that offers pre-trained models and user-friendly interfaces for optimizing them.

The rationale behind fine-tuning a pre-trained model is that it has previously been trained on a sizable dataset and has a solid grasp of the language's overall structure. The model can be refined on a conversational dataset so that it can learn to produce responses that are more tailored to the conversation's topic. The refined model will perform better at producing responses that are appropriate for customer service interactions, for instance, if the conversational dataset consists of transcripts of discussions with customer service representatives.

It is important to note that the model's hyperparameters, such as the learning rate, batch size, and number of layers, are frequently adjusted throughout the fine-tuning phase. The performance of the model can be significantly impacted by these hyperparameters, thus it's necessary to experiment with different settings to discover the ideal one. Additionally, depending on the size of the conversational dataset and the complexity of the model, the fine-tuning procedure can need a significant amount of time and processing resources. But in order for the model to understand the precise nuances and patterns of the dialogue and become more applicable to the task, this stage is essential.

Evaluate the model's performance on a held-out test set to ensure it generates realistic and appropriate responses.

A held-out test set, which is a dataset distinct from the data used to train and fine-tune the model, is one popular strategy. The model's capacity to produce realistic and pertinent responses is evaluated using the held-out test set. 

Measuring a conversational model's capacity to provide suitable and realistic responses is a typical technique to assess its performance. This can be achieved by assessing the similarity between the model-generated and human-written responses. Utilizing metrics like BLEU, METEOR, ROUGE, and others is one approach to do this. These metrics assess how comparable the automatically generated and manually written responses are to one another.

Measuring a conversational model's capacity to comprehend and respond to various inputs is another technique to assess its performance. This can be accomplished by putting the model to the test with various inputs and evaluating how well it responds to them. You might test the model using inputs with various intents, subjects, or feelings and assess how effectively it can react.

Use the trained model to generate responses to new input.

Once trained and improved, the model can be utilized to produce answers to fresh input. The last stage in creating a chatbot is testing the model to make sure it can respond realistically and appropriately to new input. The trained model processes the input before producing a response. It's crucial to remember that the caliber of the reaction will depend on the caliber of the training data and the procedure of fine-tuning.

Context is crucial when using a trained model to generate responses in a conversation. To produce responses that are relevant and appropriate to the current conversation, it's important to keep track of the conversation history. A dialogue manager, which manages the conversation history and creates suitable inputs for the model, can be used to accomplish this.

Especially when employing a trained model to generate responses, it's critical to ensure the quality of the responses the model generates. As the model might not always create suitable or realistic responses, a technique for weeding out improper responses should be in place. Using a post-processing phase that would filter out inappropriate responses and choose the best one is one way to accomplish this.

Conclusion

Training a ChatGPT model is a multi-step process that requires a large amount of data. The GPT-2 model with its ability to generate human-like text and fine-tuning it with conversational dataset can lead to very powerful results which might be extremely helpful in everyday life. The process of training is essential in creating a chatbot that can understand and respond to conversational prompts in a natural and seamless manner. As the field of AI continues to evolve, the development of sophisticated chatbots will play an increasingly important role in enhancing the way we interact with technology. Interested? Check out our other articles related to AI!

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How NOT to Create a DAO: Common Pitfalls You Should Avoid

Kajetan Olas

27 Dec 2024
How NOT to Create a DAO: Common Pitfalls You Should Avoid

Decentralized Autonomous Organizations (DAOs) represent a fundamental shift in how communities, companies, and initiatives can coordinate efforts, funds, and decisions on the blockchain. By leveraging transparent smart contracts and on-chain governance mechanisms, DAOs aim to distribute authority, reduce overhead, and foster a more democratic decision-making process. However, building a successful DAO isn’t just about cutting-edge tech or grand ideas—it also requires a clear vision, well-crafted governance rules, and a strategically engaged community.

In this article, we’ll take a counterintuitive approach by highlighting how not to create a DAO. By focusing on common pitfalls—from legal oversights to governance missteps—we can better understand what truly contributes to a thriving, sustainable DAO. This perspective aligns with the importance of recognizing cognitive biases, such as insensitivity to base rates and the conjunction fallacy, which often lead enthusiastic founders to overlook real-world data and complexity. Avoiding these traps can be the difference between launching a resilient DAO and watching an ambitious project crumble under misaligned structures or unmet expectations.

2. Missing the Governance Threshold Mark

Governance Thresholds Gone Wrong

Governance thresholds dictate how many votes or what percentage of voting power is needed to pass a proposal within a DAO. Striking the right balance here is crucial. Thresholds that are set too high can stifle progress by making it nearly impossible for proposals to succeed, effectively discouraging member participation. On the other hand, thresholds that are too low can lead to frivolous proposals or constant voting spam, making governance more of a burden than a benefit.

When designing your DAO’s thresholds, consider:

  • Community size and engagement levels: Larger communities might handle higher thresholds more comfortably, while smaller groups may benefit from lower requirements to encourage active participation.
  • Type of proposals: Operational decisions may need a lower threshold, whereas critical changes (such as tokenomics or treasury management) often require more consensus.
  • Voter fatigue: The more frequently members are asked to vote—and if it’s too easy to put forward proposals—the greater the risk of apathy or disengagement.

Over-Complex vs. Over-Simplified Governance

It’s tempting to either pile on complicated governance rules or oversimplify them to keep decision-making quick. However, both extremes can be problematic. Simplicity in governance is key to enhancing clarity and participation. Overly complex smart contracts and procedural layers can dissuade newcomers from getting involved, while an oversimplified model might fail to address potential conflicts or security vulnerabilities.

Some issues to watch out for:

  • Complex Smart Contracts: More code means more potential bugs and greater difficulty in auditing or updating governance logic.
  • Opaque Voting Processes: If members can’t easily understand how votes are tallied or how proposals are introduced, engagement drops.
  • Excessive Centralization in “Simple” Models: In trying to streamline governance, some DAOs inadvertently concentrate power in the hands of a few decision-makers.

Ultimately, aiming for a balanced governance framework—one that is easy enough for members to participate in but comprehensive enough to protect the DAO from abuse—is central to avoiding the pitfalls of governance threshold mismanagement.

3. Underestimating Legal and Regulatory Aspects

Legal Wrappers and Compliance

Building a DAO without considering legal and regulatory frameworks is a common recipe for disaster. While decentralization is a powerful concept, it doesn’t absolve projects from potential liabilities and compliance obligations. Assigning your DAO a formal legal wrapper—whether it’s a foundation, a cooperative, an LLC, or another entity type—can help mitigate personal risks for contributors and align your organization with existing regulatory regimes.

Failing to think through these details often leads to:

  • Personal Liability for Founders: Without a proper legal entity, core contributors might become personally responsible for any legal disputes or financial mishaps involving the DAO.
  • Regulatory Crackdowns: Governing bodies worldwide are actively monitoring DAOs for compliance with securities laws, anti-money laundering (AML) regulations, and tax obligations. Ignoring these can lead to penalties, fines, or forced shutdowns.

Non-Existent or Inadequate Documentation

Equally problematic is the lack of clear documentation outlining the DAO’s legal structure and operational protocols. From voting procedures to treasury management, every aspect of the DAO’s lifecycle should be properly documented to reduce ambiguity and help new members understand their responsibilities. Inadequate documentation or outright neglect can create:

  • Confusion Over Roles and Responsibilities: Without explicit definitions, it’s easy for tasks to fall through the cracks or for disagreements to escalate.
  • Inability to Enforce Rules: DAOs rely on both smart contracts and social consensus. Formalizing rules in documentation helps ensure consistent enforcement and prevents unwelcome surprises.

In short, underestimating the legal dimension of DAO creation can derail even the most innovative projects. By proactively addressing legal and regulatory considerations—and maintaining thorough documentation—you not only protect core contributors but also fortify trust within your community and with external stakeholders.

Overlooking Community Building

The Importance of Community Engagement

A DAO, at its core, is nothing without an active and supportive community. Driving grassroots enthusiasm and participation is often the deciding factor between a thriving DAO and one that fizzles out. Yet, it’s surprisingly easy to underestimate just how vital it is to nurture community trust and engagement—especially during the early stages.

Some common pitfalls include:

  • Treating Community Members as Passive Observers
    Instead of viewing your community as a dynamic force, you might slip into a one-way communication style. This discourages members from taking initiative or contributing fresh ideas.
  • Lack of Clear Roles and Channels
    Without well-defined roles and open communication channels—like forums, Discord servers, or governance platforms—members can feel confused about where to participate or how to add value.
  • Ignoring Early Feedback
    In a DAO, the “wisdom of the crowd” can be a powerful asset. Overlooking or trivializing user feedback can lead to missed opportunities for innovation and improvement.

Failing to Incentivize Properly

Well-structured incentives lie at the heart of any successful DAO. Whether you’re offering governance tokens, staking rewards, or recognition badges, these incentives must be aligned with the DAO’s long-term goals. Misalignment often causes short-sighted behavior, where participants chase quick rewards rather than contributing meaningfully.

  • Overemphasis on Token Speculation
    If the primary draw for community members is the promise of quick token price gains, you risk attracting speculators instead of builders. This can lead to fleeting participation and sell-offs at the first sign of trouble.
  • Neglecting Non-Monetary Rewards
    Recognition, social standing, and meaningful collaboration can be just as powerful as financial incentives. When a DAO fails to provide pathways for skill development or leadership, member engagement wanes.
  • Cognitive Bias Traps
    Biases such as the conjunction fallacy can mislead founders into believing that if multiple positive outcomes are possible (e.g., rising token prices, active participation, mainstream adoption), then all those outcomes will inevitably happen together. This wishful thinking can blind DAOs to the need for thoughtful, data-driven incentive models.

To avoid these pitfalls, DAO creators must actively foster a culture of transparency, collaboration, and mutual respect. By setting clear expectations, leveraging diverse incentive structures, and consistently involving community feedback, you ensure members are motivated to contribute more than just their votes—they become co-creators in the DAO’s shared vision.

5. Ignoring Technical Considerations

Token Standards and Governance Frameworks

A solid technical foundation is essential when you create a DAO, particularly if it involves on-chain governance. Selecting the appropriate token standards and governance frameworks can significantly impact your DAO’s security, efficiency, and scalability.

Some pitfalls to watch out for include:

  • Choosing Incompatible Token Standards
    If your DAO relies on a token that isn’t easily integrated with governance contracts or lacks upgradeability, you might face roadblocks when implementing new features or patching vulnerabilities.
  • Underestimating Smart Contract Complexity
    Even “simple” governance tokens can hide complex logic behind the scenes. Overlooking these complexities may result in bugs, lockouts, or exploits that harm the DAO’s reputation and finances.
  • Ignoring Off-Chain vs. On-Chain Dynamics
    Governance strategies often combine on-chain decisions with off-chain discussions (e.g., using platforms like Discord or forums). Failing to synchronize these two spheres can fracture community engagement and hamper decision-making.

Poor Architecture and Security

Robust security isn’t just about preventing hacks—it's about building an architecture that can adapt to evolving threats and changing community needs.

Key oversights include:

  • Inadequate Auditing
    Smart contracts require thorough reviews, both automated and manual. Rushing to mainnet deployment without proper audits can lead to major losses—financial, reputational, or both.
  • No Contingency Plans
    If a vulnerability is discovered, how will you respond? Lacking emergency procedures or fallback governance mechanisms can leave a DAO paralyzed when critical decisions must be made quickly.
  • Over-Engineered Solutions
    While security is paramount, over-complicating the DAO’s architecture can create unintended vulnerabilities. Keeping your setup as simple as possible reduces attack surfaces and makes it easier for community members to understand and trust the system.

In short, technical considerations form the bedrock of a functional DAO. Choosing appropriate token standards, thoroughly auditing contracts, and designing for both present-day and future needs are non-negotiable steps in avoiding costly pitfalls.

Best Practices and Lessons

When studying successful DAOs, certain themes emerge time and again. According to Aragon the most robust DAOs share a commitment to simplicity, iteration, and transparent governance. Instead of rolling out overly sophisticated models from day one, they evolve and adapt based on community feedback and real-world performance.

Here are a few best practices worth emulating:

  • Iterative Approach to Governance
    Start small and build up. Launch a Minimal Viable DAO (MVD) to test voting processes, incentive mechanisms, and proposal management. Gather community feedback and refine before taking bigger steps.
  • Simple, Transparent Rules and Processes
    Ensure proposals are easy to understand and that the voting process is accessible to all token holders. Overly complicated frameworks can dissuade new members from participating.
  • Clear Roles and Shared Responsibilities
    Define contributor and community member roles early on. Whether you rely on working groups, committees, or elected leaders, clarity prevents power vacuums and fosters collaboration.
  • Open Communication and Education
    From Discord channels to public documentation, keep conversation and learning at the heart of your DAO. Encourage members to ask questions, propose improvements, and take leadership roles.

Academic Perspectives

Beyond practical experience, a growing body of research offers theoretical insights that can strengthen DAO governance. The discusses emerging patterns in DAOs, including how incentives and on-chain rules interact with off-chain social dynamics. By examining these findings, DAO creators can better anticipate challenges—like voter apathy, whale influence, or collusion—and integrate solutions from the outset.

Incorporating academic perspectives can help:

  • Validate Governance Assumptions
    Empirical data and rigorous analyses can confirm or challenge the assumptions behind your DAO’s architecture, preventing costly mistakes.
  • Stay Ahead of Regulatory and Social Shifts
    Academics often explore how upcoming policies or societal trends might impact DAOs, offering a forward-looking lens that day-to-day builders might miss.
  • Establish Credibility
    Aligning your DAO’s structure and operations with recognized research signals professionalism and thoroughness, potentially attracting more serious contributors, partners, and investors.

Conclusion

As you can see, creating a DAO involves more than just deploying a smart contract and distributing tokens. By examining these common pitfalls—from poor governance thresholds to inadequate legal structures, from neglecting community engagement to disregarding technical complexities—you gain a clearer picture of what not to do when you set out to create a DAO. Failing to address these areas often leads to compromised security, stalled decision-making, regulatory headaches, or outright community collapse

At Nextrope, we specialize in tailored blockchain and cryptocurrency solutions, including DAO creation and tokenomics design. If you’re looking to avoid these common pitfalls and build a thriving DAO that stands the test of time, feel free to contact us or explore more resources on our blog.

Quadratic Voting in Web3

Kajetan Olas

04 Dec 2024
Quadratic Voting in Web3

Decentralized systems are reshaping how we interact, conduct transactions, and govern online communities. As Web3 continues to advance, the necessity for effective and fair voting mechanisms becomes apparent. Traditional voting systems, such as the one-token-one-vote model, often fall short in capturing the intensity of individual preferences, which can result in centralization. Quadratic Voting (QV) addresses this challenge by enabling individuals to express not only their choices but also the strength of their preferences.

In QV, voters are allocated a budget of credits that they can spend to cast votes on various issues. The cost of casting multiple votes on a single issue increases quadratically, meaning that each additional vote costs more than the last. This system allows for a more precise expression of preferences, as individuals can invest more heavily in issues they care deeply about while conserving credits on matters of lesser importance.

Understanding Quadratic Voting

Quadratic Voting (QV) is a voting system designed to capture not only the choices of individuals but also the strength of their preferences. In most DAO voting mechanisms, each person typically has one vote per token, which limits the ability to express how strongly they feel about a particular matter. Furthermore, QV limits the power of whales and founding team who typically have large token allocations. These problems are adressed by making the cost of each additional vote increase quadratically.

In QV, each voter is given a budget of credits or tokens that they can spend to cast votes on various issues. The key principle is that the cost to cast n votes on a single issue is proportional to the square of n. This quadratic cost function ensures that while voters can express stronger preferences, doing so requires a disproportionately higher expenditure of their voting credits. This mechanism discourages voters from concentrating all their influence on a single issue unless they feel very strongly about it. In the context of DAOs, it means that large holders will have a hard-time pushing through with a proposal if they'll try to do it on their own.

Practical Example

Consider a voter who has been allocated 25 voting credits to spend on several proposals. The voter has varying degrees of interest in three proposals: Proposal A, Proposal B, and Proposal C.

  • Proposal A: High interest.
  • Proposal B: Moderate interest.
  • Proposal C: Low interest.

The voter might allocate their credits as follows:

Proposal A:

  • Votes cast: 3
  • Cost: 9 delegated tokens

Proposal B:

  • Votes cast: 2
  • Cost: 4 delegated tokens

Proposal C:

  • Votes cast: 1
  • Cost: 1 delegated token

Total delegated tokens: 14
Remaining tokens: 11

With the remaining tokens, the voter can choose to allocate additional votes to the proposals based on their preferences or save for future proposals. If they feel particularly strong about Proposal A, they might decide to cast one more vote:

Additional vote on Proposal A:

  • New total votes: 4
  • New cost: 16 delegated tokens
  • Additional cost: 16−9 = 7 delegated tokens

Updated total delegated tokens: 14+7 = 21

Updated remaining tokens: 25−21 = 425 - 21 = 4

This additional vote on Proposal A costs 7 credits, significantly more than the previous vote, illustrating how the quadratic cost discourages excessive influence on a single issue without strong conviction.

Benefits of Implementing Quadratic Voting

Key Characteristics of the Quadratic Cost Function

  • Marginal Cost Increases Linearly: The marginal cost of each additional vote increases linearly. The cost difference between casting n and n−1 votes is 2n−1.
  • Total Cost Increases Quadratically: The total cost to cast multiple votes rises steeply, discouraging voters from concentrating too many votes on a single issue without significant reason.
  • Promotes Egalitarian Voting: Small voters are encouraged to participate, because relatively they have a much higher impact.

Advantages Over Traditional Voting Systems

Quadratic Voting offers several benefits compared to traditional one-person-one-vote systems:

  • Captures Preference Intensity: By allowing voters to express how strongly they feel about an issue, QV leads to outcomes that better reflect the collective welfare.
  • Reduces Majority Domination: The quadratic cost makes it costly for majority groups to overpower minority interests on every issue.
  • Encourages Honest Voting: Voters are incentivized to allocate votes in proportion to their true preferences, reducing manipulation.

By understanding the foundation of Quadratic Voting, stakeholders in Web3 communities can appreciate how this system supports more representative governance.

Conclusion

Quadratic voting is a novel voting system that may be used within DAOs to foster decentralization. The key idea is to make the cost of voting on a certain issue increase quadratically. The leading player that makes use of this mechanism is Optimism. If you're pondering about the design of your DAO, we highly recommend taking a look at their research on quadratic funding.

If you're looking to create a robust governance model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure that your DAO will stand out as a beacon of innovation and resilience in the long term.