Dynamic TAO

A new staking system that shifts control of emissions from root validators to all TAO holders. Each subnet has its own "token", and when holders stake TAO to a subnet, they receive that subnet's tokens in return. The amount of TAO staked in each subnet directly determines how many emissions it receives.

What is Dynamic TAO?

Dynamic TAO (also called "dTAO") brings a major change to how staking works in Bittensor. In the old system, you would simply pick a validator and stake your TAO with them. The validator would then decide which subnets to support with your stake, and you had no say in this choice.

Now, you have direct control. When you stake TAO, you choose which subnet (of the ones your validator is registered at) you want to stake to. Your TAO gets then exchanged with that subnet's tokens. These tokens show your support for the subnet and let you earn rewards from its success.

DISCLAIMER: SUBJECT TO CHANGE

The design of Dynamic TAO is still being discussed and changed, so please be aware that the information stated below can be changed in the future.

REFERING TO SUBNET TOKENS AS ALPHA

Each subnet has its own token (ALPHA for subnet 1, BETA for subnet 2, etc.). For simplicity, we will always refer to all subnet tokens as "ALPHA".

How It Changes Staking

The new staking system works through subnet tokens. When you stake TAO to a subnet, two things happen:

  1. Your TAO goes into that subnet's pool . The pool holds all staked TAO and subnet tokens. The amount of subnet tokens you get depends on how much TAO and how many subnet tokens are in the pool at that moment.
  2. Your stake helps decide how many of the emissions the subnet gets. The more TAO staked in a subnet's pool, the more emissions it earns from each new block .

Staking with Root

Root staking (subnet 0) offers a safer way to participate. When you stake to root, your TAO stays as TAO - it doesn't convert into subnet tokens. This protects your stake from price changes.

Even with root staking, you still earn rewards. Your validator uses your stake across all their subnets, earning subnet tokens as rewards. The subnet tokens will then be automatically exchanged into TAO, so that you never have to worry about managing subnet tokens.

Emission Model

The network gives out rewards in a balanced way. Each new block can create:

  • New TAO for subnet pools
  • ALPHA for the pools
  • ALPHA for subnet participants

When the subnet demand is low (total of TAO staked ≤ TAO emitted since start of Dynamic TAO):

The block creates new TAO and ALPHA for subnet pools and ALPHA for participants. Each subnet gets TAO based on how much is already in its pool, while each subnet gets 1 ALPHA equally.

EXAMPLE FOR EMISSIONS

If a subnet holds 30% of all staked TAO across all subnets , it would get 30% of the new TAO emissions per block .

When the subnet demand is high (total of TAO staked > TAO emitted since start of Dynamic TAO):

The block only creates ALPHA. These go to the pools and to subnet participants. This helps to reduce the initial price increases.

Every block adds ALPHA to the pools and gives ALPHA to subnet participants who do work, no matter what the demand is.

Early Staking Dynamics

Being among the first to stake in a new subnet is like being an early investor. It brings both bigger opportunities and bigger risks.

When a subnet launches, its token price starts at a 1:1 rate (1.0 TAO/ALPHA) and typically decreases during the initial phase. This decrease occurs due to a high initial inflation rate combined with low emissions in new subnets.

During this early period, participants can accumulate larger amounts of ALPHA due to lower competition. These early holdings represent a larger portion of the subnet's total token supply. As subnets develop and attract more stake, early token holdings may increase in value based on the subnet's adoption.

Subnet Participants

The system creates strong reasons for everyone to think long-term:

  • Validators succeed by building stable positions. Selling their ALPHA hurts them in three ways: they lose influence, earn fewer rewards, and reduce their subnet's value. By holding tokens, they help their subnets grow stronger.
  • Miners and Subnet Owners face similar incentives. When they sell their ALPHA, they lower their subnet's price and future rewards. Building value attracts more stake, creating a positive cycle that benefits everyone.

Democratic Control

Dynamic TAO changes how the network makes decisions. Before, root validators controlled everything. They chose which subnets got more emissions, and regular TAO holders had no direct influence. Now, every stake matters. When you stake to a subnet, you directly increase its share of emissions. Good subnets naturally attract more stake and get more emissions. Poor subnets must improve or watch their support fade away.

This creates true competition between subnets. Success comes from building real value, not from having powerful supporters. Everyone who helps make a subnet successful - validators, miners, and stakers - shares in its growth.