THE MOAT WAS NEVER THE MODEL. THE MARKET HASN'T FIGURED THAT OUT YET.

If a $500M model capability can be easily theft and distilled, there will be valuation problem.

ZTRADER RESEARCH — AI ECONOMICS & SECURITY — JUNE 2026

Everyone is debating model intelligence. That's the wrong layer.

The real battle is economic — and when a $500M capability can be extracted, compressed, and re-injected for $30M, the implications for frontier AI valuations are something the market has not yet priced.

Sometime in the spring of 2025, a …