Gustave Laurant: Mentat Minds, Proxy Staking, Bittensor Subnets, dTAO, TAO Halving, TAOFlow | Ep. 70

This episode breaks down how Mentat Minds is simplifying Bittensor subnet investing, offering a deep dive into the strategic implications of proxy staking, a major emissions overhaul, and the upcoming TAO halving.

From Pre-dTAO to Mentat Plus V2

Gustave from Mentat Minds outlines the platform's evolution since the launch of dTAO (dynamic TAO)—the system enabling Bittensor subnets to have their own tokens and dynamic emissions. Initially, Mentat Minds bridged the gap for TAO holders seeking yield opportunities. Now, with Mentat Plus V2, the focus has shifted to making subnet participation accessible.

The platform addresses a key challenge: while investors are intrigued by subnets, the complexity is a major barrier. Mentat Plus V2 is designed as a user-friendly interface for TAO holders to build a balanced portfolio of subnet investments alongside root staking, without needing to understand every technical nuance.

The Mechanics of Proxy Staking

Mentat Plus V2 is built on proxy staking, a Bittensor feature that allows users to delegate staking management to a third party. Gustave explains that this enables Mentat Minds to manage a user's portfolio on their behalf, automatically rebalancing allocations between the root network and various subnets according to the user's chosen strategy.

• The platform replicates an "Amazon for subnets" experience, allowing users to create their own index of preferred subnets (e.g., by team, sector, or individual project) and allocate percentages with a few clicks.
• Behind the scenes, Mentat Minds stakes all delegated TAO to its own hotkey, continuously optimizing for the highest APY across the best validators on every subnet. This removes the burden on users to constantly monitor validator performance, which can vary significantly from one subnet to another.
• Gustave notes, "On subnets, [APY] can vary a lot, and we actually just started talking with some subnet owners of a new feature that we are implementing."

Decentralizing Subnet Owner Stake

Mentat Minds is developing a new feature to help subnet owners decentralize their own stake. Many subnet owners currently hold consensus with their own validator key. This new tool will allow them to automatically spread their stake across the top three validators on their subnet.

This serves two purposes:

• It promotes decentralization and competition among validators.
• It frees subnet owners from the operational burden of managing their own validation infrastructure, allowing them to focus on building their subnet.

The Challenge of Weight Copiers and Commit-Reveal

The conversation briefly touches on the persistent issue of weight copiers—miners who copy the work of others instead of producing original outputs. Gustave credits the OpenTensor Foundation for its "relentless" work on Commit-Reveal, a mechanism designed to prevent this.

He observes that while the solution is effective when implemented correctly, some subnet owners prioritize other pressing issues like miner incentives and tokenomics, leaving the weight copying problem unaddressed on their networks.

The Core Mission: Education and Accessibility

Gustave emphasizes that the primary goal of Mentat Plus is to lower the barrier to entry for participating in the subnet ecosystem. He believes that simplifying the user experience is critical for Bittensor's overall adoption and growth.

• A major educational hurdle is clarifying that investing in a subnet is not risk-free. Unlike standard staking, a subnet's token can fluctuate in value against TAO, meaning investors can lose TAO.
• Gustave states, "Everyone that understands Bittensor is really hooked to the idea of subnets," Gustave states. "But the path to understanding is very hard."

Future of Mentat Minds: Supporting Subnet Owners

Looking ahead, Mentat Minds aims to build more tools to support subnet owners, who face the immense challenge of managing miners, validators, loss functions, and tokenomics. Gustave mentions ongoing discussions with Bitstarter, a platform designed to support new subnets, to explore potential collaborations that could help new projects flourish more easily.

Reflecting on dTAO: A Nine-Month Retrospective

Nine months after the launch of dTAO, Gustave reflects on its impact. He describes the environment as "harsh," with subnet owners fighting hard for emissions. However, he sees this competition as a valuable playground that provides a clear, market-driven signal of which subnets the ecosystem values most.

He also acknowledges inefficiencies, such as "dead subnets" continuing to receive emissions. This sets the stage for the next major protocol update.

The Upcoming Emissions Update (dTAO 2.0)

Gustave details an imminent, significant change to how Bittensor allocates emissions, which he refers to as "dTAO 2.0" or "Exile."

• Current Model: Emissions are based on a subnet's token price (or an EMA of its price). This can lead to stagnating subnets with high historical prices continuing to receive large emissions without new progress.
• New Model: Emissions will be based on TAO flow—the net amount of TAO moving into a subnet. This shifts the focus from a static price point to the rate of growth and positive ecosystem feedback.
• Strategic Implication: This change is designed to reward accelerating subnets and cut off emissions to stagnant ones, creating a more dynamic and meritocratic competitive landscape. Subnets that fail to attract new capital will no longer be subsidized.

The First TAO Halving: Market Implications and Technical Challenges

With the first TAO halving—a 50% reduction in the issuance of new TAO—approaching in mid-December, Gustave highlights its importance.

• Reduced Sell Pressure: Since TAO emissions primarily reward miners and validators who often sell to cover operational costs, a 50% reduction in issuance should significantly decrease market sell pressure.
• Technical Risk: A critical, unresolved issue is the unsynchronized halving schedules of TAO and the dTAO tokens issued by subnets. The TAO flowing into a subnet's liquidity pool will halve, but the dTAO flowing out will continue on its own schedule, potentially damaging the pool's equilibrium over time. This is a key technical challenge the community must address before the event.

Biggest Misconceptions: The Hardship of Running a Subnet

Gustave argues that one of the biggest misunderstandings in the ecosystem is the true difficulty of launching and managing a successful subnet. It is far from the "super easy" process sometimes portrayed.

• He stresses the need for a "playbook" for subnet owners covering miner incentives, validation strategy, and tokenomics.
• He views the temporary cap of 128 subnets as a positive measure, allowing the protocol to mature and ensuring a higher baseline quality for projects, which is crucial for attracting serious external interest.

Analyzing the "Sum of Subnets" and Subsidy Mechanisms

The discussion covers the "sum of subnets," a metric representing the total value of all subnet tokens. The protocol includes a subsidy mechanism that kicks in when this value drops below 1, designed to support subnet prices.

• Gustave was initially skeptical but admits the mechanism worked surprisingly well to limit downside during market downturns.
• While he believes market forces should ultimately determine equilibrium, he sees the current subsidy as a reasonable balance for an ecosystem still in its early stages.

Actionable Advice for TAO Allocators

For investors deciding how to allocate their TAO, Gustave offers a clear, risk-managed approach:

• Start Small, Start Early: Begin by allocating a small portion of your portfolio (e.g., 10%) to subnets and keep the majority (90%) in root staking.
• Use Indexes: For newcomers, using an index like the Mentat 5 or Mentat 15 on Mentat Plus is a simple way to gain diversified exposure without needing to research individual subnets deeply.
• Understand Volatility: Get a feel for how subnet token prices move against TAO. As you become more comfortable with the volatility, you can gradually increase your subnet exposure.

Conclusion

This episode highlights Bittensor's evolution toward a more mature, market-driven economy. For investors, the key is navigating this increasing complexity with tools like Mentat Minds. Researchers should closely monitor how the new flow-based emissions model reshapes subnet competition and innovation, as it marks a pivotal shift in the network's incentive structure.