The latter is much better (since you can clean up, review, update responses and filter your datasets).
I suspect nobody is doing real student teacher distillation, it’s just easier to do a bunch of training on the same giant corpus then post train on the synthetic corpus with its reasoning traces etc. (which might have been generated by a bigger better LLM)
Given the release timelines I suspect all 4.x after Opus 4 are probably self-distillation based fine-tuned models. The latest paper by Apple is focusing on code generation using the simple technique hence the name simple self-distillation (SSD) [4],[5].
I've got a strong feeling that self-distillation is the second best thing happened to LLM after transformer breakthrough.
[1]Self-Distillation Enables Continual Learning [pdf] (25 comments):
https://news.ycombinator.com/item?id=48165265
[2] Self-Distillation Enables Continual Learning:
https://arxiv.org/abs/2601.19897
[3] Self-Distilled Reasoner: On-Policy Self-Distillation for Large Language Models:
https://arxiv.org/abs/2601.18734
[4] Embarrassingly simple self-distillation improves code generation (201 comments):
https://news.ycombinator.com/item?id=47637757
[5] Embarrassingly Simple Self-Distillation Improves Code Generation:
Having said that, I don't think these are classic student teacher distillation from random (which was my point). In fact, the "Embarrassingly Simple Self-Distillation" paper is using exactly what I was talking about "fine-tune on those samples with standard supervised fine-tuning".
Though you could argue that perhaps labs just save the per token distribution and use that during fine tuning … which starts looking more like student teacher fine tuning if not classic distillation from random weights
The teacher distillation is a corpus of text, and the "next token after the context" would be looking-up the context in the corpus, and for each occurrence the label is what followed in the corpus, scaled down by the number of occurrences of the context. The teacher is moot on contexts outside of the corpus though, unlike the usual teacher model in distillation.
It gets used for quantisation, basically recovering accuracy for lower quants (Nvidia calls it QAD). Can’t speak to how widespread it is though