The Opentensor Foundation unveils two major protocol upgrades—Root Claim and Tao Flow—designed to refine economic incentives, empower stakers, and reward subnets that genuinely sequester TAO.
The Power to Choose: Introducing Root Claim
- "If you hold TAO on root, you can actually get the dividends that you would be owed... you'd be able to claim it as alpha tokens."
- "We also think that this may be very valuable... as people decide to turn this on... we will necessarily increase the holder base of the 128 subnets."
Bittensor is rolling out "Root Claim," a new feature giving TAO stakers a choice in how they receive their network dividends. Previously, all dividends from subnets were automatically sold for TAO, creating constant sell pressure. Now, users can opt-in to receive these dividends as a basket of Alpha tokens from across all 128 subnets.
- Empowering Stakers: The feature is opt-in via a simple command. If you do nothing, your dividends will continue to be auto-sold into TAO as before, though on a slightly delayed two-day cadence.
- Community Governance: This change allows the community to exert more selective influence. Stakers can hold tokens of projects they support and sell those they don't, transforming a passive yield into an active governance tool. This aims to distribute ownership more broadly and foster a more engaged holder base.
From Price to Flow: A Smarter Emission Engine
- "Price is a very good market signal, but it's not actually the signal that we want to be following... The thing that we would like to be following... is the ability for subnet pools to sequester TAO."
- "It will remove projects that are dead. If they can't actually get constant buy pressure, they're not going to get any emission."
The core engine of Dynamic TAO is getting a major upgrade. Emissions will no longer be distributed based on a subnet's token price, but on its "Tao Flow"—a direct measure of the net inflow or outflow of TAO from its liquidity pool. The old price-based model was flawed because it favored subnets with high initial liquidity, allowing them to collect emissions even while slowly bleeding value.
- Rewarding Real Value: Tao Flow directly measures what matters most: a subnet's ability to attract and lock up TAO. This new metric is an unbiased estimator of a subnet's performance, removing the distorting effect of liquidity.
- Killing Zombie Projects: Emissions will now be far more dynamic. Projects with positive buy pressure will be rewarded quickly, while those with net outflows will see their emissions cut to zero. This creates a more competitive and healthy ecosystem by starving underperforming or abandoned subnets of network rewards.
Key Takeaways:
- Empowered Staking, Granular Governance: Root Claim transforms passive root staking into an active governance mechanism, allowing users to "vote with their dividends" by choosing which subnet tokens to hold or sell.
- Survival of the Fittest, Redefined: The switch to "Tao Flow" emissions marks a pivotal shift. Subnets now compete on their ability to attract and retain capital (sequester TAO), not just maintain a high price, effectively culling zombie projects from the network.
- Incentives Are Now Tightly Coupled to Value: Both upgrades align the protocol’s economic rewards directly with desired user and subnet behavior—active participation and verifiable capital inflow—paving the way for a more efficient and scalable network.
For further insights and detailed discussions, watch the full episode: Link
This episode details two fundamental upgrades to Bittensor’s economic engine: the introduction of manual Root Claim for stakers and a shift to "Tao Flow" for calculating subnet emissions.
Return of TGIF and a New Focus
- The speaker, TJFT, opens by reintroducing the "Thank God It's Friday" (TGIF) call format, which previously served as a bi-weekly update from the core team. This format is being revived to facilitate direct communication with the Bittensor community about core protocol ideas and developments.
- The previous "Novelty Search" format, which highlighted new teams, is being de-emphasized. TJFT notes that the ecosystem has matured with community-led podcasts now fulfilling that role.
- The new TGIF aims to be a platform for discussing ideas directly, rather than acting as a "stamp of approval" for new projects.
Introducing Root Claim: More Choice for TAO Stakers
- The first major announcement is the implementation of Root Claim, a feature giving TAO stakers more control over their dividend rewards. This re-opens a debate from the pre-Dynamic TAO (DTO) era about how root stakers should receive their earnings from across all subnets.
- Background: Currently, TAO staked on the root network (Subnet 0) has weight across all subnets (1 TAO represents 18 Alpha on every subnet). The dividends earned from this weight are automatically sold for TAO, creating consistent sell pressure on all Alpha tokens.
- Why Auto-Sell Was Implemented: TJFT explains this "auto-sell" mechanism was a bridge to prevent extreme volatility and network attacks during the initial DTO launch. It also provided a "risk-free" yield in TAO for stakers who did not want to hold a diverse portfolio of volatile Alpha tokens.
- The New Root Claim Mechanism: A forthcoming update (scheduled for Monday) will allow stakers to choose between two options for their root dividends:
- Default (Auto-Sell): Receive dividends as TAO, as is currently the case. No action is required.
- Manual Claim (Opt-In): Receive dividends as a basket of native Alpha tokens from across the 128 subnets.
- Implementation Details:
- Stakers can opt-in using new CLI commands: `BTCLI stake claim` and `BTCLI stake unclaim`.
- Initially, the choice is global—a user claims dividends from all subnets or none. Selective claiming for specific subnets is a potential future feature.
- Dividend payouts for root stakers will be amortized and distributed randomly over a two-day period, rather than every 360 blocks.
- TJFT on the strategic implication of Root Claim: "If instead we... have more distributed ownership, individuals can come and say, 'Hey, I don't like this behavior... I want to choose to claim on this subnet and turn that into TAO, but I don't want to claim here where I like what they're doing.'
- Actionable Insight for Investors: This change gives TAO stakers direct agency. By choosing to claim Alpha tokens, investors can support promising subnets by holding their tokens, thereby reducing the automatic sell pressure that has historically suppressed Alpha token prices. This also allows for a more granular, community-driven form of governance, where stakers can selectively sell tokens of subnets they disapprove of.
Upgrading Emissions: From Price to "Tao Flow"
- The second, more technically profound change is a redesign of the subnet emission calculation, moving from a price-based model to one based on Tao Flow.
- The Problem with Price-Based Emissions: The current DTO model allocates TAO emissions to subnets based on the market price of their Alpha token. TJFT argues this is a "lossy heuristic" because it doesn't directly measure what Bittensor aims to incentivize: the sequestering of TAO.
- Liquidity Distortion: Subnets with high liquidity can maintain a high price and receive emissions even while experiencing a net outflow of TAO (i.e., capital flight). This rewards stagnant or "dead" subnets at the expense of growing ones.
- Introducing Tao Flow: The new model directly measures the net flow of TAO into or out of a subnet's liquidity pool on a block-by-block basis.
- Tao Flow is defined as the net amount of TAO being added to or removed from a subnet's pool. It is a direct indicator of buy-side or sell-side pressure.
- Emissions will now be allocated based on a moving average of a subnet's positive Tao Flow. Subnets with a net negative flow (losing TAO) will receive zero emissions for that period.
- Technical Details from Max:
- The algorithm measures buys and sells each block and calculates an exponential moving average of the net flow.
- A cutoff (likely zero) is established; any subnet with a net flow below this limit receives no emissions.
- The system includes a "temperature" parameter, allowing for fine-grained control to make the distribution more "winner-takes-all" if desired.
- Crucially, the initial version of Tao Flow calculation will exclude the automatic sell pressure from root dividends, giving new and growing subnets a fairer chance to achieve positive inflow.
- Actionable Insight for Researchers and Investors: This is a pivotal shift in Bittensor's economic incentives.
- For Investors: Subnets must now actively attract and retain capital to earn emissions. This change will rapidly separate productive subnets from stagnant ones. Monitor subnets that can consistently generate positive Tao Flow, as they will be the primary beneficiaries of this new, more dynamic emission model.
- For Researchers: The move from a static metric (price) to a dynamic one (flow) represents a significant evolution in decentralized incentive design. It directly targets capital sequestration, potentially making the entire network more efficient at capturing and locking up its native asset, TAO.
Conclusion: A More Responsive and Efficient Economic Engine
This episode reveals two critical upgrades that refine Bittensor’s economic incentives. The introduction of Root Claim empowers TAO holders with greater choice and influence, while the shift to Tao Flow emissions creates a more dynamic, meritocratic system that directly rewards subnets for sequestering capital and punishes stagnation.
