Knowledge distillation is a widely adopted technique for transferring capabilities from LLMs to smaller, more efficient student models.However, unauthorized use of knowledge distillation takes unfair advantage of the considerable effort and cost put into developing frontier models.We investigate methods for modifying teacher-generated reasoning traces to achieve two objectives that deter unauthorized distillation: (1) anti-distillation, or degrading the training usefulness of query responses, and (2) API watermarking, which embeds verifiable signatures in student models.We introduce several approaches for dynamically rewriting a teacher’s reasoning outputs while preserving answer correctness and semantic coherence.Two of these leverage the rewriting capabilities of LLMs, while others use gradient-based techniques.Our experiments show that a simple instruction-based rewriting approach achieves a strong anti-distillation effect while maintaining or even improving teacher performance.Furthermore, we show that our rewriting approach also enables embedding watermarks that can be reliably detectedwith essentially no false alarms.Our code is available at https://github.com/xhOwenMa/trace-rewriting.

To address data locality and privacy restrictions, Federated Learning (FL) has recently been adopted to fine-tune large language models (LLMs), enabling improved performance on various downstream tasks without requiring aggregated data. However, the repeated exchange of model updates in FL can result in prohibitively high communication costs, hindering the distributed learning process. To address this challenge, we propose EcoLoRA, a novel communication-efficient federated fine-tuning framework for LLMs. Leveraging the modular structure, we propose a round-robin segment sharing scheme, where each client uploads only a complementary LoRA segment per round to reduce network bandwidth. It is further combined with adaptive sparsification methods tailored to LoRA’s training dynamics and lossless encoding techniques. We conduct extensive evaluations on both question-answering and value-alignment tasks across multiple datasets and models. The results show that EcoLoRA significantly reduces communication overhead without compromising performance. For instance, it reduces communication time by up to 79% and total training time by up to 65%.