What is Bittensor?

What is Bittensor?

Bittensor is an open-source platform that facilitates the production and exchange of digital commodities like machine intelligence, storage, and compute power. It operates on the subtensor blockchain, which consists of specialized networks called subnets, each tailored to produce specific digital commodities.

Contributors, known as subnet miners, receive TAO tokens as rewards based on the quality of their contributions. The platform's decentralized structure is governed by the Yuma Consensus algorithm, which ensures fair and transparent reward distribution by continuously evaluating and compensating top performers.

Bittensor has catalyzed a vast ecosystem of over 30 TAO subnets, creating billions in value. Its current public valuation in the crypto markets exceeds $4 billion, positioning it as a top 40 cryptocurrency.

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Bittensor Subnets

Bittensor subnets are specialized marketplaces within the Bittensor ecosystem, designed for competitive production of various language models. These subnets operate off-chain, hosting competitions where participants, either as subnet miners or validators, produce and validate digital outputs respectively. Each subnet is identified by a unique netuid obtained through a registration fee paid in TAO, facilitating diverse roles and engagement strategies in the ecosystem.

Core Aspects of Bittensor Subnets:

• Setup and Engagement: Establishing a subnet requires a TAO fee, granting a netuid. Participants register their resources and wallets to engage as miners or validators.
• Roles and Responsibilities: Miners execute tasks while validators assess the quality of outputs, influencing reward distribution.
• Incentive-driven Output: The quality and efficiency of outputs dictate the rewards in TAO, assessed through a programmed incentive mechanism.
• Diverse Tasks: Tasks vary by subnet focus, for example Subnet 01 which focuses on text prompts, currently holding a lifetime emission of 85.44k TAO, to data storage in Subnet 21.
• Performance-based Rewards: The subtensor blockchain, through the Yuma Consensus, dynamically allocates rewards based on performance metrics.

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Bittensor (TAO) Tokenomics

Bittensor's tokenomics revolves around its TAO cryptocurrency, originally launched as the Kusangi network in January 2021 and later transitioned to the Nakamoto network in November 2021, carrying over all previously mined TAO. The current Finney network began operations in March 2023. 

TAO has a capped supply of 21 million tokens, with blocks minted every 12 seconds, each distributing one TAO, leading to a daily issuance of 7,200 TAO, evenly divided between miners and validators. Currently, 31.34% of TAO's total supply is in circulation.

TAO issuance undergoes periodic halvings, approximately every four years, to manage the currency's inflation and ensure a controlled distribution of tokens. These halvings reduce the block reward, gradually decreasing the number of new tokens entering circulation, with the next event scheduled for October 2025. 

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TAO Staking

TAO staking allows holders to delegate their tokens to a validator within the Bittensor network to earn passive income through validation rewards. This inclusive mechanism enables participants of any stake size to contribute to network security and governance. Notably, over 81.9% of circulating TAO is staked, representing more than $3.5 billion in circulating market capitalization.

A fixed commission of 17.99% is deducted from these rewards. Token holders can delegate to any active validator ready to accept nominations, using the TaoStats Delegation App, command line tools, or PolkadotJS for the delegation process.

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Bittensor Governance

Bittensor's governance framework transitions from central management by the Opentensor Foundation to a decentralized community-driven structure. This process begins with a bicameral legislature composed of the Triumvirate, made up of Opentensor employees, and the Senate, consisting of leading delegate hotkeys holders. Proposals generated by the Triumvirate require majority approval (50% + 1) from the Senate and closure by a Triumvirate member to pass.

This system enhances network security over the previous model, which relied on a single 'sudo' key, vulnerable to compromise. Under the current system, network manipulation would necessitate compromising both a Triumvirate member and securing a majority in the Senate, significantly bolstering defenses against unauthorized changes.

For instance, a new subnet proposal by Triumvirate member Bob needs Senate approval, followed by Triumvirate member Alice’s execution, ensuring comprehensive community oversight and robust security checks.

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Closing Thoughts

In summary, Bittensor stands out as an advanced open-source platform, enabling the creation and exchange of digital commodities through its subtensor blockchain. It promotes a secure and democratic environment with a governance model that transitions from central management to community-driven processes. 

With its competitive subnets and a deliberate tokenomics strategy to control inflation and reward contributions, Bittensor offers a dynamic infrastructure for developers and investors. This ensures equitable distribution and robust incentives, positioning it at the forefront of digital commodity exchange and blockchain governance innovations.