This episode unveils two fundamental shifts in Bittensor's tokenomics—the introduction of Root Claim for direct alpha token dividends and a radical new emission model based on TAO flow, moving away from simple price-based incentives.
The Return of TGFT and Context Setting
- The host opens by reintroducing "TGFT" (Thank God it's Thursday/Friday), a community call format that previously focused on internal developments at the Opentensor Foundation (F). This format is being revived to create a direct channel for discussing ideas and protocol changes with the Bittensor community. The shift moves away from the "Novelty Search" format, which highlighted new teams, to allow for deeper dives into the protocol's core mechanics and economics.
- The host explains that the proliferation of community-led podcasts (like Revenue Search) now provides a better platform for new teams to showcase their work.
- This revival of TGFT is intended to be a more direct, idea-focused conversation about the state and future of the Bittensor network.
Root Claim Explained: A Shift in Dividend Distribution
- The first major announcement is the introduction of Root Claim, a feature that changes how dividends are distributed to users staking TAO on the root network (Subnet 0). This addresses a long-standing debate about whether root stakers should receive their cross-subnet dividends as automatically sold TAO or as the native alpha tokens of each subnet.
- Original Design (Auto-Sell): Previously, dividends earned by root-staked TAO were automatically sold for TAO. This was implemented to prevent extreme initial yields on new subnets (simulations showed potential for 20,000% APY), ensure network stability during the transition to the alpha token economy, and reward participants who actively chose to invest in subnets.
- The host notes a key philosophical reason for the auto-sell design: "this airdrop design effectively just gives people control over your subnet that they they didn't earn."
- The New Mechanism (Opt-In Claim): With the network now capped at 128 subnets, the computational cost of airdropping individual alpha tokens has become manageable. The new Root Claim feature allows stakers to opt-in to receive their dividends directly as a "basket" of all 128 alpha tokens.
- How it Works: Users can enable this feature via a new CLI command (
BTCI stake claim ). If no action is taken, the system defaults to the original auto-sell mechanism.
- Distribution Cadence: Claimed alpha dividends will be distributed on a slower, amortized schedule, averaging once every two days, rather than every 360 blocks per subnet.
Actionable Insights for Investors:
- Reduced Sell Pressure: This change could significantly reduce the automatic, constant sell pressure on all alpha tokens, potentially leading to fairer price discovery and a less "demoralizing" market for DTAO traders.
- Selective Governance: Root stakers gain a new tool for governance. By choosing to claim and hold alpha tokens from projects they support (and sell those they don't), they can selectively influence the ecosystem without making direct new investments. This empowers passive stakers to participate more actively in shaping the network.
A New Emission Model: From Price to TAO Flow (TFlow)
- The second, more significant change is a complete overhaul of the emission distribution mechanism. The protocol will move from a price-based model to one based on TAO Flow (TFlow), a metric designed to more accurately measure a subnet's ability to attract and retain TAO.
- The Flaw in the Price-Based Model: The current system allocates TAO emissions based on the market price of a subnet's alpha token. The host explains this is a "lossy heuristic" because it is heavily influenced by liquidity. Subnets with high initial liquidity can maintain a relatively high price and continue receiving emissions even while experiencing a net outflow of TAO, effectively rewarding "dead" or declining projects.
- Introducing TFlow: Proposed by Igor from Tal 5, TFlow directly measures the net amount of TAO entering or leaving a subnet's liquidity pool on a block-by-block basis. This metric directly incentivizes the core goal of DTAO: sequestering TAO from the open market.
- Max's Technical Breakdown: Max, a core developer, clarifies the algorithm. It calculates an Exponential Moving Average (EMA) of net buys and sells. Emissions are then allocated to subnets with a positive TFlow (above a cutoff, likely zero), with a temperature parameter allowing for a more "winner-takes-all" distribution.
- Max highlights the logic: "it feels fairly natural to say we won't give anybody emissions who has an inflow less than zero if you're hemorrhaging TAO you get nothing like that's extremely natural."
Strategic Implications for Researchers and Investors:
- Dynamic and Responsive Emissions: Emissions will become far more volatile and responsive to real-time market activity. Projects that successfully generate buy pressure will be rewarded almost immediately, while those bleeding TAO will see their emissions cut off swiftly.
- Focus on Sequestration: This aligns incentives directly with TAO sequestration. Researchers and investors should now prioritize analyzing a subnet's ability to generate sustainable demand and inflow over its static price or liquidity depth.
- Future Scalability: By removing the dependency on the sum of all subnet prices, this model makes it feasible to scale Bittensor to thousands of subnets in the future without diluting the rewards for top performers.
Community Q&A and Future Outlook
- Bookkeeping: For those with strict accounting needs, the host advises against opting into Root Claim for now, as tracking the "dust" from 128 different tokens can be complex. The default auto-sell to TAO remains the simplest option.
- Volatility: The TFlow model is not expected to increase overall market volatility. The total amount of liquidity injected into the ecosystem per block remains the same; it is merely distributed more effectively.
- Subnet Registration: The cost of registering a new subnet will remain tied to the price of the lowest-priced subnet, a mechanism that is now decoupled from the emission calculation.
- Protocol Iteration: The host emphasizes that this is not the final iteration of the emission mechanism. The Foundation intends to continue refining the protocol's economic incentives to optimize performance, signaling a move towards more active, dynamic management of the network's tokenomics.
Conclusion
The episode details a major economic overhaul, shifting from price-based emissions to a dynamic TAO flow model and introducing Root Claim. Investors must now analyze TAO sequestration and holder behavior, as these are the new primary drivers of protocol rewards and subnet success.
