Adapting large language models (LLMs) to domain-specific tasks via fine-tuning is often infeasible: models are protected by intellectual property, while sensitive data cannot be shared due to privacy regulations. A promising paradigm, Offsite Tuning (OT), addresses this challenge by constructing an emulator of the original model. Data owners leverage the emulator to train an adapter on downstream data, which is then plugged back into the original model, enabling knowledge transfer without transmitting either the original model or the raw data. However, emulators constructed by existing OT-based methods often retain substantial inference capabilities, thereby exposing model capability privacy and posing risks of misuse. To address this, we propose Loss Landscape Elevation Offsite Tuning (LLEOT), a framework that secures data privacy as well as model parameter and capability privacy. At its core, Loss Landscape Elevation (LLE) enforces a fixed margin between the loss landscapes of the emulator and the original model. We theoretically demonstrate that LLE simultaneously (i) degrades emulator inference via perplexity amplification and (ii) preserves gradient alignment, ensuring consistent convergence for adapter training. Extensive experiments confirm that LLEOT achieves strong adaptation performance while effectively mitigating emulator misuse. Code is available at https://github.com/Z-eloto/LLEOT.

Recent research in federated large language models (LLMs) has primarily focused on enabling clients to fine-tune their locally deployed homogeneous LLMs collaboratively or on transferring knowledge from server-based LLMs to small language models (SLMs) at downstream clients. However, a significant gap remains in the simultaneous mutual enhancement of both the server’s LLM and clients’ SLMs. To bridge this gap, we propose FedMKT, a parameter-efficient federated mutual knowledge transfer framework for large and small language models. This framework is designed to adaptively transfer knowledge from the server’s LLM to clients’ SLMs while concurrently enhancing the LLM with clients’ unique domain insights. We facilitate token alignment using minimum edit distance (MinED) and then selective mutual knowledge transfer between client-side SLMs and a server-side LLM, aiming to collectively enhance their performance. Through extensive experiments across three distinct scenarios, we evaluate the effectiveness of FedMKT by utilizing diverse public LLMs and SLMs on a variety of NLP text generation tasks. Empirical results demonstrate that FedMKT simultaneously boosts the performance of both LLMs and SLMs. Our code has been contributed to the FATE open-source project and is now publicly accessible at https://github.com/FederatedAI/FATE-LLM/tree/main/python/fate_llm/algo/fedmkt

Large Language Models (LLMs) have emerged as a transformative force in artificial intelligence, demonstrating exceptional proficiency across various tasks. However, their deployment in resource-constrained environments and concerns over user data privacy pose significant challenges. In contrast, Small Language Models (SLMs) offer computational efficiency but often lag in performance. To address these issues, we propose FedCoT, a federated framework designed for the Chain-of-Thought (CoT) distillation of knowledge from LLMs to SLMs, while ensuring the preservation of clients’ data privacy. FedCoT ensures secure and efficient knowledge transfer from an LLM on a high-powered server to an SLM on a resource-constrained client, while adhering to privacy requirements. Leveraging perturbed prompts and rationales generated through the CoT approach, the framework enhances the performance of the client’s SLM without compromising user data privacy within a multi-task learning framework. We propose two privacy protection strategies: the Exponential Mechanism Strategy and the Adaptive Exponential Mechanism Strategy, which balance user prompt privacy and the usability of rationales. Empirical evaluation on various text generation tasks demonstrates the effectiveness of FedCoT in training task-specific SLMs with enhanced performance while prioritizing data privacy protection. Our code has been contributed to the FATE open-source project and is now publicly accessible at https://github.com/FederatedAI/FATE-LLM/tree/main/python/fate_llm/algo/fedcot