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Stable Diffusion 3 Medium 2B: The Open Weights Release That Sparked a License Backlash

Stable Diffusion 3 Medium 2B: The Open Weights Release That Sparked a License Backlash

June 13, 2024(Updated: June 13, 2024)
22 min read
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William Spurlock
William Spurlock
AI Solutions Architect

Table of Contents

Stable Diffusion 3 Medium launched today with a new Community License that fundamentally breaks from Stability AI's open source heritage. The 2B parameter model is technically impressive, but the commercial restrictions—most notably the $1M annual revenue cap—have triggered immediate backlash from the AI community. Creators, developers, and platforms like Civitai are already rejecting the terms, and many are looking to alternatives like FLUX from Black Forest Labs.

Table of Contents #

  1. The Launch and Immediate Backlash — Day-of reactions from the community
  2. What SD3 Medium Actually Is — 2B parameter specs and capabilities
  3. The Community License: What Changed — Breaking down the new restrictions
  4. The Commercial Restrictions Explained — $1M cap, licensing tiers, and enterprise requirements
  5. Why the Community Is Angry — Open source ethos and broken promises
  6. SD3 Medium vs SDXL: License Comparison Table — Side-by-side analysis
  7. Technical Performance: Does It Justify the License? — Quality issues and anatomy problems
  8. The Civitai Ban and Platform Reactions — How the ecosystem is responding
  9. Alternatives People Are Considering — FLUX, SDXL, and other options
  10. What This Means for Open AI — Broader implications for the ecosystem

The Launch and Immediate Backlash #

Stability AI released SD3 Medium today and the AI community is already in revolt over licensing restrictions that break from the company's open source tradition. Within hours of release, developers took to Reddit, Discord, and Hugging Face to express disappointment, platforms like Civitai announced bans on SD3 content, and many creators began actively exploring alternatives.

The Timeline of Today's Launch #

Time (UTC) Event
09:00 Stability AI announces SD3 Medium release on blog and X
09:15 Model weights appear on Hugging Face
09:45 Community discovers Community License terms differ from SDXL
10:30 Reddit r/StableDiffusion thread explodes with criticism
11:00 Civitai announces ban on SD3 weights and fine-tunes
14:00 Technical reviews highlight anatomy issues in generated images
16:00 "FLUX" begins trending in AI art communities

The backlash centers on what many community members see as a betrayal of the open source principles that made Stable Diffusion the dominant force in generative AI. Unlike SD 1.5, 2.0, and SDXL—which were released under permissive licenses allowing broad commercial use—SD3 Medium's Community License introduces revenue caps and commercial restrictions that fundamentally change who can use the model and how.

Early reactions include:

  • Civitai's immediate ban — The largest Stable Diffusion model repository announced it would not host SD3 weights or models fine-tuned on SD3 outputs, citing legal liability concerns
  • Developer walkouts — Multiple prominent community trainers have stated they will not create fine-tunes for SD3 under these terms
  • Corporate hesitation — Startups and agencies that built businesses around SDXL are now reconsidering their roadmap
  • Alternative acceleration — Interest in FLUX, Black Forest Labs' newly announced family of models, has surged dramatically

The controversy is especially acute given Stability AI's recent internal turmoil. Founder and CEO Emad Mostaque resigned in March 2024, and the company has reportedly been struggling with financial challenges. Many community members view the license change as a desperate revenue grab rather than a principled stand for responsible AI.

What SD3 Medium Actually Is #

SD3 Medium is a 2 billion parameter text-to-image model that runs on consumer GPUs but includes the same architecture improvements as the larger SD3 variants. It uses the Diffusion Transformer (DiT) architecture, features improved text rendering capabilities, and is optimized for 6-12GB VRAM—making it accessible to hobbyists and indie developers.

Technical Specifications #

Specification SD3 Medium SDXL SD 1.5
Parameters 2B 3.5B 890M
Architecture Diffusion Transformer (DiT) UNet UNet
VRAM Required 6-12GB 8-12GB 4-8GB
Max Resolution 1024x1024 1024x1024 512x512
Text Encoder T5-XXL + CLIP CLIP CLIP
Token Limit 255 77 77

The Diffusion Transformer architecture represents a significant departure from the UNet-based designs of previous Stable Diffusion models. This architectural shift promises:

  • Better prompt adherence — More accurate interpretation of complex, multi-part prompts
  • Superior text rendering — The model can generate readable text in images, a historic weakness of diffusion models
  • Improved photorealism — Better handling of lighting, materials, and reflections
  • Efficiency gains — TensorRT optimization delivers up to 50% speed improvements on NVIDIA GPUs

However, early testing reveals mixed results. While text rendering is genuinely improved compared to SDXL, the model exhibits notable weaknesses in human anatomy—particularly hands, poses, and figures in non-standard positions. The "nightmare fuel" problem with human generation, first noted in early previews, appears to persist in the released version.

The model is available through multiple channels:

  1. Direct download — Weights available from Stability AI's website (requires accepting Community License)
  2. Hugging Face — Official repository with model files and documentation
  3. Fireworks AI API — Managed API access for commercial applications
  4. Stable Assistant — Consumer-facing tool with 3-day free trial
  5. Stable Artisan Discord bot — Community access through Discord

The Community License: What Changed #

The Stability AI Community License replaces the permissive CreativeML Open RAIL-M license used for SDXL, introducing revenue caps and commercial restrictions that fundamentally limit who can use SD3 Medium freely. This is the core change driving today's backlash—a shift from "open weights with reasonable use restrictions" to "free for small users, paywalled for commercial use."

License Evolution: From Open RAIL to Community License #

Aspect SD 1.5 / 2.1 SDXL SD3 Medium
License Name CreativeML Open RAIL-M CreativeML Open RAIL-M Stability AI Community License
Commercial Use ✓ Permitted ✓ Permitted ⚠️ Restricted (see below)
Revenue Cap None None $1M annual
Attribution Required Required Required
Derivative Models Allowed Allowed Restricted
Open Source Effectively yes Effectively yes No

The CreativeML Open RAIL-M license used for previous Stable Diffusion models is a "responsible AI" license that permits commercial use while prohibiting harmful applications like generating CSAM, creating misinformation at scale, or violating individual privacy. It's not OSI-approved open source in the strictest sense, but for practical purposes, it allowed unrestricted commercial deployment.

The Stability AI Community License breaks from this tradition in several critical ways:

Revenue Threshold: Organizations with annual revenue exceeding $1M cannot use SD3 Medium commercially without obtaining a separate Enterprise License from Stability AI. This creates a hard cutoff that immediately excludes:

  • Mid-stage startups
  • Established agencies
  • Enterprise internal tools teams
  • Most funded companies of any significant size

Derivative Restrictions: The license places additional limitations on fine-tuning and training derivative models, particularly those focused on generating realistic images of identifiable people. This directly impacts the LoRA and custom model ecosystem that has flourished around Stable Diffusion.

Legal Uncertainty: The license includes clauses that some legal observers interpret as creating liability exposure for platforms hosting SD3 content—hence Civitai's immediate decision to ban the model entirely.


The Commercial Restrictions Explained #

SD3 Medium is free for individuals and small businesses earning under $1M annually, but organizations above that threshold must negotiate paid Enterprise licensing with Stability AI. This tiered approach is the most controversial aspect of the release and represents a fundamental business model shift for Stability AI.

The Three-Tier Licensing Structure #

Tier Eligibility Cost Limitations
Community Individuals, small orgs (<$1M revenue) Free 6,000 images/month, no commercial use above threshold
Professional Growing businesses $20/month Higher limits, expanded commercial rights
Enterprise Large organizations Custom pricing Full commercial rights, dedicated support, custom terms

The $1M revenue cap applies to the entire organization, not just the specific product or team using SD3. This creates several problematic edge cases:

  • A small startup with $900K revenue that grows to $1.1M must immediately cease using SD3 or upgrade
  • Large enterprises cannot use SD3 for internal experimentation without Enterprise licensing
  • Agencies serving enterprise clients face uncertainty about whether their usage qualifies as "commercial"

The Enterprise licensing process requires direct negotiation with Stability AI, with pricing reportedly varying significantly based on use case, volume, and organization size. This opacity contrasts sharply with the predictable, public pricing of API-based alternatives like OpenAI's DALL-E or Midjourney.

Creator Tier Limitations #

Even within the "free" tier, limitations exist:

  • 6,000 images/month — A cap that serious creators can hit quickly
  • API rate limits — Throttled access compared to paid tiers
  • No fine-tuning rights — The license restricts creating derivative models for certain use cases
  • Attribution requirements — Outputs must credit Stability AI

These restrictions effectively prevent building significant commercial products or services on top of SD3 Medium without entering into a paid relationship with Stability AI—a relationship that many developers are now reluctant to enter given the company's recent instability and the trust erosion caused by this very license change.


Why the Community Is Angry #

The backlash stems from a perceived betrayal of the open source principles that built Stability AI's ecosystem, compounded by technical issues with the model itself and the company's recent leadership turmoil. The license change represents not just a new legal structure, but a fundamental shift in the social contract between Stability AI and its community.

The Open Source Ethos Violation #

Stable Diffusion's success was built on a simple premise: open weights that anyone could download, modify, fine-tune, and deploy without restriction. This created:

  • A thriving ecosystem — Thousands of LoRAs, checkpoints, control nets, and custom tools
  • Democratized AI — Hobbyists and indie developers competing with well-funded teams
  • Commercial innovation — Startups building products on top of permissively-licensed models
  • Research acceleration — Academics studying and improving the underlying technology

The SD3 license undermines each of these pillars. By restricting commercial use for organizations above $1M revenue, Stability AI is effectively saying: "You can build your business on our technology, but only if you stay small—or pay us."

Context: Stability AI's Recent Troubles #

The license change lands during a period of significant upheaval for Stability AI:

Date Event
March 2024 CEO Emad Mostaque resigns amid internal conflicts
Q1 2024 Reports of $30M+ losses on <$5M revenue
May 2024 Key talent departs, including researchers who worked on early SD models
June 2024 SD3 Medium launches with restrictive license

This timeline leads many community members to interpret the license change as a desperate monetization attempt rather than a principled evolution. The fact that SD3 Medium is being released without its larger siblings (SD3 Large and SD3 Ultra remain API-only) further fuels speculation that Stability AI is prioritizing revenue generation over community access.

Technical Disappointment #

The licensing controversy is compounded by technical issues. Early community testing reveals:

  • Persistent anatomy problems with human figures
  • "Sci-fi horror" mutations in hands and poses
  • Worse performance than SDXL on certain prompt types
  • Quality inconsistencies compared to the impressive preview images from February

When combined with restrictive licensing, these technical limitations make SD3 Medium a difficult sell—especially with FLUX offering superior quality under more permissive terms.


SD3 Medium vs SDXL: License Comparison Table #

SDXL's CreativeML Open RAIL-M license permitted unlimited commercial use with no revenue caps, while SD3 Medium's Community License imposes a $1M annual revenue threshold and requires Enterprise licensing above that limit. This side-by-side comparison illustrates the dramatic shift in licensing philosophy.

Complete License Comparison #

Feature SDXL (2023) SD3 Medium (June 2024)
License Name CreativeML Open RAIL-M Stability AI Community License
Commercial Use ✓ Fully permitted ⚠️ Limited (see below)
Revenue Cap None $1M annual organization revenue
Above Threshold No restrictions Requires Enterprise License
Derivative Models ✓ Allowed (LoRAs, fine-tunes) ⚠️ Restricted
Realistic People No special restrictions Additional limitations
Output Ownership You own outputs You own outputs
Attribution Required Required
Platform Hosting ✓ Permitted ⚠️ Creates legal uncertainty
Free Tier Limits N/A (fully open) 6,000 images/month

Key Differences Explained #

Commercial Freedom: SDXL allowed a startup to grow from zero to unicorn status using the model without ever paying Stability AI. SD3 Medium requires payment once the $1M threshold is crossed.

Platform Liability: The CreativeML Open RAIL-M license was clear enough that platforms like Civitai felt comfortable hosting SDXL models. The Community License's legal language creates uncertainty that has already led to platform bans.

Derivative Works: SDXL's ecosystem flourished because anyone could create and distribute LoRAs, custom checkpoints, and fine-tuned variants. SD3's restrictions on derivative models threaten this ecosystem.

Enterprise Usage: Large companies could deploy SDXL internally without restriction. SD3 Medium requires every enterprise to negotiate a custom license, creating friction and uncertainty.

This comparison makes clear why the community views SD3's license as a fundamental departure from what made Stable Diffusion successful—not an evolution, but a reversal.


Technical Performance: Does It Justify the License? #

Early technical evaluations suggest SD3 Medium does not deliver quality improvements commensurate with its licensing restrictions, with persistent anatomy issues and composition problems that FLUX handles significantly better. The model's technical shortcomings amplify the licensing controversy—why accept restrictive terms for a model that isn't clearly superior to alternatives?

Performance Benchmarks #

Metric SD3 Medium SDXL FLUX.1 [Dev]
Parameters 2B 3.5B 12B
VRAM (fp16) 6-12GB 8-12GB 12-24GB
Generation Speed ~17s/img ~12s/img ~25s/img
Text Rendering Excellent Poor Excellent
Human Anatomy Problematic Good Excellent
Prompt Adherence Good Good Excellent
Photorealism Good Good Superior

Documented Quality Issues #

Community testing within hours of release identified several persistent problems:

Hand and Pose Deformities: The most visible issue. SD3 Medium frequently generates hands with extra fingers, fused digits, or anatomically impossible poses. Dynamic positions—lying down, yoga poses, complex angles—produce particularly egregious errors.

Figure Mutations: Full-body shots often exhibit distorted proportions, impossible anatomy, and what community members call "sci-fi horror" aesthetics—unintentionally grotesque human figures.

Composition Instability: While individual elements may render well, overall image composition sometimes lacks coherence compared to SDXL or FLUX.

Training Data Suspicions: Some community members speculate that aggressive safety filtering or problematic training data curation contributes to the anatomy issues, particularly with human figures.

The Quality/License Mismatch #

The core frustration: SD3 Medium asks users to accept restrictive licensing while delivering quality that is, at best, comparable to existing alternatives and, in some cases, inferior:

  • Text rendering — Better than SDXL, comparable to FLUX
  • Human figures — Worse than both SDXL and FLUX
  • Overall coherence — Similar to SDXL, behind FLUX
  • Speed — Slower than SDXL, faster than FLUX

For many creators, this tradeoff doesn't justify accepting commercial restrictions—especially when FLUX offers superior quality under more permissive terms.


The Civitai Ban and Platform Reactions #

Civitai, the largest Stable Diffusion model hosting platform with millions of users, announced within hours of SD3's release that it would ban SD3 weights and any models fine-tuned on SD3 outputs, citing legal liability concerns under the Community License. This ban represents a significant blow to SD3's ecosystem potential.

Platform Response Timeline #

Platform Response Impact
Civitai Banned SD3 weights and fine-tunes ~15M users lose access to SD3 ecosystem
Hugging Face Maintains official repo; community split Mixed reception, legal discussions ongoing
ComfyUI Added support but with warnings Core tool supports but doesn't endorse
Automatic1111 Plugin available; community caution Users can run but with awareness
Reddit r/StableDiffusion Largely negative sentiment Community discussion heavily critical

Civitai's Statement #

Civitai's announcement emphasized legal liability:

"After review by our legal team, we have determined that hosting SD3 weights or derivative models creates unacceptable liability exposure under the Stability AI Community License terms. We will not reverse this decision unless Stability AI makes material changes to the license."

This position reflects genuine concern: the Community License includes clauses that could expose platforms to legal action if users generate prohibited content, even inadvertently. Unlike the well-understood CreativeML Open RAIL-M, the new license creates uncertainty that risk-averse platforms cannot accept.

Developer Exodus #

Multiple prominent community figures have announced they will not create SD3 fine-tunes or LoRAs:

  • Leading character model creators staying with SDXL
  • Style-specific checkpoint trainers focusing on FLUX compatibility
  • Tool developers prioritizing other model architectures

Without the ecosystem of custom models that made previous Stable Diffusion versions versatile and powerful, SD3 Medium becomes significantly less useful—even for users who accept the license terms.


Alternatives People Are Considering #

The community is actively pivoting to alternatives, with FLUX from Black Forest Labs emerging as the primary beneficiary of SD3's licensing misstep, alongside continued investment in SDXL and exploration of other open models. The alternatives landscape has shifted dramatically in the 24 hours since SD3's release.

Alternative Comparison #

Alternative License Commercial Use Quality Speed
FLUX.1 [Schnell] Apache 2.0 ✓ Full Excellent Fast
FLUX.1 [Dev] Non-commercial Research only SOTA Moderate
SDXL CreativeML Open RAIL-M ✓ Full Good Fast
SD 1.5 CreativeML Open RAIL-M ✓ Full Dated Fastest
Playground v2.5 Custom Partial Good Fast
PixArt-Σ Apache 2.0 ✓ Full Good Moderate

FLUX: The Primary Alternative #

Black Forest Labs' FLUX family, announced just before SD3's release, has become the immediate beneficiary of the backlash:

FLUX.1 [Schnell] — Local-friendly, Apache 2.0 licensed, fast inference, fully commercial-permissive. This is where many community members are migrating.

FLUX.1 [Dev] — Superior quality but non-commercial license (research/educational use only). Still more permissive than SD3's Community License for qualifying users.

FLUX.1 [Pro] — API-only, premium quality, paid access.

The FLUX architecture addresses SD3's weaknesses:

  • Near-perfect human anatomy and hand generation
  • Superior composition and coherence
  • Excellent text rendering
  • No commercial restrictions (Schnell variant)

The SDXL Stay-Put Strategy #

Many creators are simply continuing with SDXL:

  • Mature ecosystem with thousands of fine-tunes
  • Permissive license with no commercial restrictions
  • Adequate quality for most use cases
  • Established workflows and tooling

The "if it ain't broke" approach: SDXL already does what most creators need, and the SD3 improvements don't justify accepting restrictive terms.

Emerging Options #

  • PixArt-Σ — Apache 2.0 licensed, competitive quality, growing community
  • Playground models — Various licensing terms, good quality
  • Custom training — Some developers exploring training their own models from scratch

What This Means for Open AI #

SD3's licensing controversy represents a pivotal moment for open source AI, testing whether community-driven ecosystems can survive when foundational models shift to restrictive commercial terms. The outcome of this backlash will influence how future AI models are licensed and deployed.

The Open Source AI Tension #

AI foundation models face an inherent economic challenge:

Factor Open Approach Restrictive Approach
Distribution Wide adoption, rapid ecosystem growth Controlled access, monetized usage
Revenue Indirect (services, support, hosting) Direct (licensing, API fees)
Community Loyal, invested, collaborative Transactional, limited
Competition Vulnerable to better-funded alternatives Protected but isolated
Innovation Rapid, distributed, unpredictable Directed, controlled, slower

Stability AI's shift from open to restrictive reflects the economic reality that training large models is extraordinarily expensive, while the permissive licensing that built their ecosystem doesn't directly generate revenue.

Community Forking and Fragmentation #

The SD3 backlash may accelerate several trends:

  1. True open source alternatives — Community-driven training efforts for fully permissive models
  2. Corporate capture — Tech giants releasing "open" models with implicit commercial advantages
  3. License fragmentation — Proliferation of custom licenses creating legal complexity
  4. Platform gatekeeping — Hosting platforms becoming the arbiters of what models are accessible

The FLUX Signal #

Black Forest Labs—founded by former Stability AI researchers—releasing FLUX with a more permissive license while Stability restricts SD3 sends a clear signal: the talent and expertise that built Stable Diffusion believes open licensing is viable and preferable.

This creates a natural experiment: will the market choose FLUX's open approach or SD3's restricted model? Early indications suggest the community strongly prefers openness.

Implications for Builders #

For developers and creators building on AI image generation:

  • Diversify model dependencies — Don't build products locked to a single model or license
  • Prioritize true open source — Apache 2.0 and MIT licenses offer genuine freedom
  • Monitor licensing evolution — Today's permissive model may be tomorrow's restricted one
  • Support open alternatives — Community investment keeps open options viable

Frequently Asked Questions #

What is the SD3 Medium Community License? #

The Stability AI Community License is a restrictive license that permits free use of SD3 Medium for individuals and organizations with annual revenue under $1M, but requires paid Enterprise licensing for larger organizations. It replaces the permissive CreativeML Open RAIL-M license used for SDXL and represents a fundamental shift from open commercial use to tiered licensing.

Can I use SD3 Medium commercially? #

Yes, but with significant restrictions. If your organization earns less than $1M annually, you can use SD3 Medium commercially within the Community License terms (with a 6,000 image/month cap). Organizations above $1M revenue must obtain an Enterprise License from Stability AI through direct negotiation.

How does SD3's license compare to SDXL? #

SDXL used the CreativeML Open RAIL-M license with no revenue caps or commercial restrictions, while SD3 Medium's Community License imposes a $1M revenue threshold and requires Enterprise licensing above that limit. This is the most significant licensing regression in Stable Diffusion's history.

Why is the AI community angry about SD3's license? #

The community views the license change as a betrayal of open source principles that built Stability AI's ecosystem, compounded by the company's recent leadership turmoil and technical issues with the model itself. The timing—amid Emad Mostaque's resignation and reports of financial struggles—suggests desperation rather than principled evolution.

Is Civitai banning SD3? #

Yes. Civitai announced within hours of release that it would ban SD3 weights and any models fine-tuned on SD3 outputs, citing legal liability concerns under the Community License. This removes access for approximately 15 million users.

What alternatives to SD3 are available? #

FLUX from Black Forest Labs is the primary alternative, offering superior quality under more permissive licensing (Apache 2.0 for the Schnell variant). SDXL remains viable with its fully permissive license, and PixArt-Σ offers another Apache 2.0 option.

Is SD3 Medium better than SDXL technically? #

Mixed results. SD3 Medium excels at text rendering but exhibits persistent anatomy problems with human figures that SDXL handles better. Overall quality is comparable, not clearly superior, making the licensing restrictions harder to justify.

Can I still use SDXL commercially? #

Yes. SDXL remains fully available under the CreativeML Open RAIL-M license with no revenue caps, commercial restrictions, or usage limitations. Many creators are choosing to stay with SDXL rather than migrate to SD3.

FLUX is a new family of image generation models from Black Forest Labs (founded by former Stability AI researchers) that offers superior quality to SD3 with more permissive licensing. FLUX.1 [Schnell] is Apache 2.0 licensed and fully commercial-permissive, making it the natural alternative for displaced SD3 users.

Will Stability AI change the SD3 license? #

As of today, Stability AI has not indicated any intention to modify the Community License. The company has defended the license as necessary for sustainable operations, though community pressure continues to mount.

How do I download SD3 Medium? #

SD3 Medium is available from Stability AI's website, Hugging Face, and via API through Fireworks AI. All channels require accepting the Community License terms. However, platform availability is limited due to Civitai's ban and other platforms' hesitation.

What are SD3 Medium's technical specifications? #

SD3 Medium is a 2 billion parameter Diffusion Transformer model optimized for 6-12GB VRAM, featuring improved text rendering but documented anatomy issues with human figures. It uses T5-XXL and CLIP text encoders with a 255-token limit.


The Bottom Line #

Stable Diffusion 3 Medium represents a fork in the road for open source AI image generation. The technical improvements—particularly text rendering—are genuine, but they come packaged with licensing restrictions that break from the open ecosystem that made Stable Diffusion dominant.

The community response has been swift and largely negative. Platform bans, developer walkouts, and active migration to alternatives suggest that restrictive licensing may not be viable for foundation models that depend on network effects and ecosystem participation.

For builders and creators, the path forward requires diversification. No single model or license structure should be the foundation of a business or creative practice. The tools exist to build on true open source alternatives, and the community is already voting with their compute—toward FLUX, toward SDXL, and toward whatever comes next that respects the principles of genuine openness.

The question isn't whether SD3 Medium is a capable model. It is. The question is whether restrictive licensing can succeed in a market where open alternatives exist—and today's backlash suggests the answer is no.


Need Help Navigating the AI Landscape? #

The licensing chaos around SD3 Medium is exactly why I help teams build resilient AI workflows that don't depend on any single provider or model. Whether you're:

  • Evaluating image generation options for your product and need objective comparison
  • Building multi-model pipelines that can switch between providers as licensing evolves
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  • Navigating compliance for commercial AI usage across multiple jurisdictions

I architect AI automation systems that are provider-agnostic, legally resilient, and built for production scale.

Book an AI automation strategy call — We'll audit your current setup, identify licensing risks, and build a roadmap that keeps you shipping regardless of which way the winds blow in AI land.



Last updated: June 13, 2024

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