# The Substitution Wave in AI

> Source: <https://www.tomtunguz.com/inflation-deflation-ai/>
> Published: 2026-06-07 00:00:00+00:00

Three forces are reshaping the AI cost structure :

The natural response from AI buyers is substitution.

Coinbase 6 :

At Coinbase we’re working hot on routing prompts to cheaper models where appropriate, & in some cases have been able to keep costs roughly flat, while token usage continues to grow exponentially.

Lindy 7 :

Pulled the trigger today & switched 100% of Lindy traffic to DeepSeek v4, churning from Anthropic models. Saves us millions of $ & we’re actually seeing an

increasein performance on many core use cases. Transformative for the business.

Harvey 8 :

On a 100-task slice of our Legal Agent Benchmark (LAB), SFT moved Kimi 2.6’s all-pass rate from 11% to 15%, beating Opus’ 14%. But the cost gap was even more striking : $84 vs $954 across the same 100 tasks, or ~11x cheaper.

Cursor went further. They post-trained Kimi K2.5 into their own production model, Composer.[9](https://tomtunguz.com/index.xml#fn:9)

Composer 2.5 is exceptionally intelligent & up to 10x more efficient than similarly capable models.

Coinbase’s quote shows where the savings go : costs flat, tokens exponential. Buyers don’t pocket the discount — they spend it on more intelligence.

Closed models are getting more expensive at the frontier; open models are getting cheaper at parity. The choice is which slope you want under your unit economics.