This episode dissects the surprising decoupling of BitTensor subnet valuations from the broader crypto market downturn, revealing strong underlying demand for specialized AI commodities and evolving strategies in the DTA era.
Market Decoupling: Subnet Strength Amidst Broader Weakness
- The discussion kicks off highlighting a significant trend: while the general crypto market experienced a downturn (coinciding with Brody's vacation), BitTensor (TAO) subnet valuations have shown remarkable resilience and upward momentum.
- Brody humorously notes the market's recovery upon his return, quipping, "correlation is causation here."
- Data from TAOStats App visually confirms this, showing TAO allocated to the root network steadily declining while TAO staked in subnets climbs consistently, indicating a clear shift in capital allocation and investor confidence towards subnet-specific value propositions.
Analyzing Subnet Growth and Root Network Dynamics
- David from Ready AI provides context, noting that roughly 40% of TAO emissions now go to subnet alpha holders, approaching a widely anticipated 50% threshold.
- This shift is seen as a potential tipping point where capital might significantly move from validating the root network into specific subnets.
- He observes that the sum of subnet market caps exceeding the value of TAO itself is a "really good sign," suggesting the market recognizes tangible value in the commodities produced by these specialized networks, beyond just speculation on the future of BitTensor as a whole.
- Despite this shift, root validators still earn a respectable ~20% APY.
Subnet Registration and TAO Burn Mechanics
- Demand for network participation remains high, evidenced by the ongoing registration of new subnets.
- The cost to acquire a subnet slot fluctuates between 300 and 600 TAO, with speakers emphasizing a crucial change: this registration TAO is now burnt, permanently removing it from circulation, rather than being recycled.
- This deflationary pressure adds another layer to TAO's tokenomics, directly linking network expansion to supply reduction.
Subnet Performance Surge: Volatility and Strategy
- The hosts highlight that 13 different subnets saw price increases of over 50% in the past week alone, showcasing widespread bullish sentiment across the ecosystem.
- Addressing the inherent volatility, David explains Ready AI anticipated this early phase, modeling for factors like root validator selling pressure.
- He states, "we're really just trying to execute on our you know kind of 90-day you know kind of plan... there's still quite a bit of volatility but I think as you said a lot of it is is more up and to the right."
- This suggests a strategic focus on long-term execution despite short-term market swings.
Deep Dive: Ready AI's (Subnet 33) 90-Day Roadmap and Strategy
- Miner Optimization Toolkit: Ready AI is actively developing and releasing tools to simplify the mining process on their subnet. This includes one-click miners for various hardware (GPU/CPU) and upcoming one-click instance deployments, evidenced by over 100 downloads of their Docker image shortly after release. The goal is to lower the barrier to entry, broaden the miner base, and ultimately scale the production of high-quality structured data.
- Structured Data and AI Agent Partnerships (Common Crawl & Upcoming): A key focus is showcasing the power of structured data for real-time intelligent agents. They recently launched an AI agent partnership with Common Crawl, a vital open-source web crawl dataset used by major AI labs like OpenAI and Meta. Ready AI's subnet processes Common Crawl data, enabling a chat interface for users to query the dataset via web, Discord, and Slack. David teases a significant upcoming partnership with a major Crypto Twitter creator, aiming to release "the most powerful AI agent kind of sort of yet released in the space" within the month, built upon Subnet 33's capabilities.
Addressing Miner Accessibility and Competition
- Brody raises a pertinent question about whether lowering the entry barrier via the toolkit might quickly saturate earning opportunities.
- David clarifies the toolkit aims to ease the initial setup and learning curve, not eliminate the need for effort or guarantee profits.
- He emphasizes that the environment remains highly competitive, with miners consistently outperforming benchmarks like GPT-4o by significant margins (50%+).
- The strategic goal is to combat miner concentration and foster a larger, more decentralized, and robust network of contributors.
New Subnets on the Block: Patrol (SN81) and Staking (SN88)
- Patrol (Subnet 81): Launched by the tow.com team (spun out of Tensor), Patrol focuses on blockchain security analytics, building a data graph to track fund movements and label wallets, similar to Arkham Intelligence but initially focused on BitTensor/Subtensor. Brody notes its importance for network security, referencing past hacks and the current limitations in Subtensor tooling. Future expansion to Solana and other chains is planned.
- Staking (Subnet 88): This subnet aims to incentivize the discovery and sharing of optimal staking strategies across the BitTensor ecosystem, rewarding users who identify high-yield approaches. It draws comparisons to projects like Alpha Trader Exchange or Mentat Minds but focuses specifically on staking rewards. A potential challenge discussed is incentivizing users to share genuinely valuable strategies rather than keeping them private.
The Evolving Landscape: Niche vs. Broad Subnet Strategies
- The conversation touches upon the diversity of subnet approaches, contrasting highly niche use cases with broader, more foundational commodities like those from Ready AI (SN33), Vision (SN19), or Text-Prompting (SN4).
- Brody raises the critical question for investors: how to value these different strategies and determine market demand, noting that the broader AI industry itself is still figuring out value accrual (foundation models vs. application layer).
- David adds that some niche subnets might struggle to scale or find value outside the immediate BitTensor ecosystem.
Monetization Strategies: From Commodity to Business Model
- A significant shift in thinking is discussed: moving beyond viewing subnet tokens purely as commodities towards seeing subnets as businesses that need to generate external value and potentially revenue.
- David emphasizes Ready AI's focus on "monetizing the commodity sort of off of BitTensor" through partnerships.
- The example of PTN (Subnet 8) and the Delta Prop Shop built on its signals illustrates this, where external applications drive demand for the underlying subnet's intelligence, potentially leading to token buybacks or other value-accrual mechanisms.
- 563 suggests subnet owners should actively consider paths to profitability, especially if not purely focused on R&D.
Marketing in the DTA Era: Capturing Developer and Investor Attention
- The introduction of DTA (Dynamic TAO Allocation) – where market forces and staking determine subnet rewards – has fundamentally changed marketing.
- David notes the shift from primarily targeting a small group of validators pre-DTA to needing broad, public communication now.
- Brody offers strategic advice for subnets: prioritize owned audiences (newsletters, Discord), curate intimate activations (small groups, dinners), take calculated risks with content, and avoid low-value tactics like spam bots or generic giveaways.
- The focus should be on genuinely engaging developers and the community, as attracting talent and mindshare is crucial.
- Ready AI plans to enhance transparency with tools like real-time update bots in their upcoming Discord.
Innovation Spotlight: Social Tensor's Rebrand and Nuance (SN28)
- Social Tensor has rebranded to Zuzu and launched a new subnet, Nuance (SN28).
- Nuance introduces an experimental incentive mechanism rewarding users for contributing meaningful content to conversations among verified accounts, aiming to foster quality discourse – described as "Kaido on BitTensor."
- Given the team's demonstrated understanding of virality (e.g., the "make it a quote" tag), this experiment in incentivizing social interaction is considered one to watch.
- Brody frames it as an example of "crypto incentivizes max creativity and AI enables max creativity."
Head-to-Head: Deep Research Subnets (SN68 vs. SN25) and Novelty Search Effects
- A brief comparison is made between two research-focused subnets: Metanova Labs (SN68, formerly Nova) and Mainframe (SN25, formerly Protein Folding by Macrocosmos).
- Metanova appears to have gained recent momentum.
- The hosts speculate whether this is partly due to the "novelty search pump" – a recurring pattern where subnets see price increases leading up to their weekly novelty search evaluation call on Thursdays, driven by attention rather than fundamental changes.
- This highlights the ongoing influence of attention dynamics on short-term price action.
Reflective and Strategic Conclusion
- The episode underscores the growing maturity of the BitTensor ecosystem, where subnet utility and market validation are increasingly driving value, independent of broader crypto trends.
- For investors and researchers, tracking specific subnet partnerships, monetization progress, and effective community engagement is now critical for identifying sustainable opportunities.
