Foreword

AI development has evolved with the development of data, computing power, and algorithms in recent years. The progress of research has produced huge breakthroughs, especially the emergence of OpenAI GPT-4, which represents the arrival of the basic LLM large model, which has promoted the improvement of productivity and the transformation of social efficiency.

However, the disadvantages of these large closed-source models represented by GPT-4 have also been revealed, that is, centralized models usually have restrictions on third party integrations. , which affects the scalability and interoperability of AI agents based on centralized models.

Therefore, open source large models such as Llama and other series of models are sought after by more and more researchers. However, open source does not mean transparency, and it also faces many challenges. .

The main dilemma is that open source AI development does not have any economic incentives for most contributors. Even if there are some competition rewards, this It is usually a one-off, and subsequent improvement and development work still needs to generate electricity for love. Unless it reaches a certain scale and has a large community of followers, there will be more possibilities to achieve income and more contributors to continue to improve. .

Therefore, the Bittensor AI project attempts to use web3 token mining to make open source AI development more sustainable, verifiable and efficient. operation. Through Yuma Consensus, we introduce and align resources with research side Miner, verifier Validator, and AI project side Subnet Creator, making the entire AI research more transparent and decentralized, and anyone can participate in AI contributions. And win the rewards you deserve.

The performance of tokens in the secondary market also confirms people’s expectations. The price has increased from more than 50 US dollars in September 2023 to now in 2024. It was more than 500 yuan in December, an increase of 10 times!

Recently, Bittensor’s investor and founder of Digital Currency Group established an accelerator specifically to incubate subnet projects within the bittensor ecosystem.Accelerator Yuma serves as CEO, showing his confidence and potential in the Bittensor project.

Source: Coindesk

Of course, the success of any project cannot be without doubts. Since the birth of the Bittensor project, there have been a lot of FUDs. In this article, we have summarized many questions that have not yet been fully answered, and tried to understand Bittensor’s future positioning and possibilities in the decentralized AI track through research and analysis.

What is Bittensor?

Bittensor was founded in 2021 by a team from Toronto, Canada, Jacob Robert Steeves, Ala Shaabana, and Garrett Oetken.

Bittensor is a decentralized AI infrastructure used by AI developers to build and deploy machine learning models or other AI-related development on it. Many Web3 AI projects, regardless of whether they already have their own blockchain, can access Bittensor's blockchain "subtensor" and become a subnet of it.

What is Subnet?

Subnet forms the core of the Bittensor ecosystem, and every Bittensor Each subnet is an independent incentive-based competitive market. Anyone can create a subnetwork, customize what tasks the subnetwork is to perform, and design an incentive mechanism (in the machine learning analogy, the incentive mechanism can be understood as a target loss function that can guide model training toward the desired results) . You only need to pay the registration fee (priced in TAO) to create a subnet, and you will get a netuid for the subnet. Note that a subnet creator does not need to assume the running tasks within the subnet, but transfers the rights to operate the subnet tasks to others.

The task of operating this subnet provides another way for others to participate, by joining an existing subnet. If you join nowIf there is a subnet, you can participate in two ways: as a subnet miner or as a subnet validator. In addition to paying the registration fee denominated in TAO (if he is a validator, he also needs to pledge TAO), he only needs to provide a computer with sufficient computing resources, and register the computer and his wallet into a subnet subnet. At the same time, run the subnet miner module miner module or subnet verifier module validator module provided by the subnet builder on this computer (both modules are Python codes in the Bittensor API).

How does the competitive market for subnets work?

Subnets Here's how network competition works: Let's say you decide to become a subet miner. The subnet validator will assign some tasks to you to complete. Other miners in the subnet will also receive tasks of the same type of work. After all subnet miners complete their tasks, they submit the results to the subnet validator.

Subnet validators will then individually evaluate and rank the quality of tasks submitted by subnet miners. As a subnet miner, you will be rewarded (priced in TAO) based on the quality of your work. Likewise, other subnet miners will receive corresponding rewards based on their performance. At the same time, subnet validators will also be rewarded for ensuring that high-quality subnet miners receive better rewards, thus promoting the continued improvement of the overall quality of the subnet. All these competition processes are completed automatically based on the code incentive mechanism written by the subnet creator.

Source: Steps on how Subnet Creator defines Incentive Mechanism

The incentive mechanism is ultimately a judgment on the performance of subnet miners. When incentives are well calibrated, a virtuous cycle can be formed where subnet miners compete to continuously improve on the required tasks.

Conversely, poorly designed incentives can lead to exploits and shortcuts, adversely affecting the overall quality of the subnet and discouraging fair miners. .

The specific work of each subnet miner depends on the original purpose of the subnet creator, which can be more changeable or more specific. For example, the miner task of subnet 1 is Respond to text prompts sent by the subnet validator and give the best prompt completion result, or the task of the miner in subnet 47 is to provide storage

Each sub-network also has its own unique research and commercialization direction, such as trying to overcome technical difficulties in a certain AI field, such as decentralized AI training, verifiable reasoning, or providing some AI-required Infrastructure and resources, such as GPU trading markets or data annotation services, or subnets that help users identify AIGC deepfake technology, such as Subnet 34 - BitMind

Currently Bittensor has more than 55 subnets, and this number is still increasing!

Source:IOSG Ventures

The role of Subtensor blockchain< /p>

Obviously, the blockchain and the project token TAO played a big role in this series of competitions.

First of all, Subtensor The blockchain records the key activities of all subnets in its ledger. More importantly, the Subtensor blockchain is responsible for determining the reward distribution for subnet miners and subnet validators. The consensus (YC) algorithm continues to run on the blockchain Subtensor. Each subnet validator ranks the work quality of all subnet miners, and all rankings of each subnet validator will be sent together as The collective input is provided to the YC algorithm. Generally, the rankings of validators in different subnets will arrive at Subtensor at different times, but the YC algorithm on Subtensor will wait for all rankings to arrive, usually every 12 seconds. The algorithm calculates rewards (denominated in TAO) based on the ranking inputs of all validators and is deposited into the wallets of subnet miners and subnet validators. The Subtensor blockchain operates independently and continuously for each subnet. With YC algorithm

YC consensus algorithm mainly considers two factors. The first is a weight vector maintained by each subnet validator. Each element of the vector represents the weight assigned to the subnet miners. The weight represents the historical performance of subnet miners based on that subnet validator, and each subnet validator ranks all subnet miners by this weight vector. The second factor is the amount of stake per validator and miner. The on-chain Yuma consensus uses this weight vector and the number of pledges to calculate rewards and distribute them among subnet validators and subnet miners.

The Bittensor API will play the role of transmitting and connecting the opinions of the verifiers on the subnet and the Yuma consensus on the Subtensor blockchain. In addition, validators in the same subnet will only connect to miners in the same subnet, and validators and miners in different subnets will not communicate and connect with each other.

Source: Bittenso

Validator's Game Theory

To participate as a subnet validator or subnet miner, you must first register and stake. Registration means registering the key in the desired subnet and obtaining the UID slot in the subnet. The UID slot represents the verification rights of the subnet. Note that subnet validators can have multiple UID slots at the same time and verify for multiple subnets, but they do not need to increase the pledge amount. By staking the amount of TAO once, they can select multiple UID slots and verify for multiple subnets. (Similar to the concept of restaking).

Therefore, in order to obtain the most rewards, verification stakers will tend to choose to provide verification services for all subnets. However, not all staking validators have the right to actually provide staking services. Only the top 64 validators in a subnet ranked according to the number of pledges are considered to have the real verification permission of the subnet. This reduces the risk of validators doing evil, as the amount of stake becomes a high threshold and increases the cost of doing evil (you must have at least 1000 TAO to set a weight in the subnet). In order to increase the number of pledges, each validator will try to establish a good reputation and performance record, attract more TAO entrusted pledges to increase the number of pledges, and become the top 64 validators of the subnet.

When subnet validator and subnet miner (running miner does not(Staking required) After registering the key to the subnet, you can start mining.

Unique token incentive economy

All TAO token rewards are newly minted , similar to Bitcoin. Bittensor’s $TAO has the same token economics and issuance curve as Bitcoin. TAO supply: The total supply is capped at 21 million, which is halved every 4 years.

Bittensor starts with a fair launch without pre-mined TAO tokens or ICO. Currently, the network generates 7,200 TAOs per day, 1 TAO is generated per block, and a block is generated approximately every 12 seconds. The total token supply is capped at 21 million, following a programmatic issuance plan similar to Bitcoin.

However, Bittensor introduces a unique mechanism that once half of the total supply is distributed, the issuance rate will be halved. This halving occurs approximately every 4 years and continues at each halving point of the remaining tokens until all 21 million TAO tokens are in circulation.

Although TAO adopts the issuance curve and philosophy of Bitcoin, due to its recycling mechanism, this curve is actively dynamic and not as complete as Bitcoin fixed.

Recycling mechanism:

The daily token issuance in the current cycle is 7,200 TAO (Same as Bitcoin’s first cycle issuance from January 2009 to November 2012).

However, a certain number of dynamic TAOs are recycled through key (re)registration every day.

To become a miner or validator, you must register a key with the network and meet other GPU and computing power requirements. Registration requires recycling TAO, that is, paying a certain amount of TAO to put it back into the network.

Each key (re)registration will remove the TAO from the circulating supply and put it back into the protocol's issuance pool, where it can be used again in the future. Mining.

This mechanism delays the planned 4-year halving time becauseThe recycled TAO is dynamic. The recycled TAO may increase significantly when more keys are (re)registered, TAO recycling costs increase, or other subnets are released.

Not only that, registration is not only applicable to new joiners, but also to those who have been deregistered due to the following reasons:

For miners, their models and reasoning are not competitive enough among other miners;

For validators, they fail to consistently set the correct weights, maintain issuance, or do not have enough TAO (self-delegation + other delegators’ shares) in the key.

These factors themselves will also intensify the growth of registration demand.

The number of recycled TAOs = the total number of registered (or re-registered) keys for each subnet * average registration (or re-registered) cost)

< p style="text-align: left;">Therefore, the first halving originally planned to take place 4 years after launch may be postponed to 5 or 6 years, or even longer. It all depends on the balance between TAO’s issuance and recycling.

The Bittensor network was launched on January 3, 2021. According to token recycling data from taostats, the planned halving date is expected to be delayed to November 2025. moon.

Source: https://taostats.io/tokenomics

What is dTAO?

dTAO is Opentensor/Bittensor An innovative incentive mechanism proposed by the network is designed to solve the problem of inefficient resource allocation in decentralized networks. Different from the traditional method of manually voting by validators to determine resource allocation, dTAO introduces a market-based dynamic adjustment mechanism that directly links resource allocation to subnet network performance, thereby optimizing the fairness and efficiency of reward distribution.

Core mechanism

Market-based dynamic resource allocation The dynamic TAO allocation mechanism is based on the market performance of subnet tokens . Each subnet in the network has an independent token, and its relative price determines the distribution ratio of TAO issuance among subnets. As market information changes, this distribution ratio will be dynamically adjusted to ensure efficient and efficient resource flow. Potential subnets

Embedded liquidity pool design Each subnet is configured with a liquidity pool composed of TAO and subnet tokens (subnet/TAO token pair). Users can mortgage TAO. Subnet tokens are exchanged in the liquidity pool. This design encourages users to invest in subnets that perform well and indirectly supports the overall development of the network.

Fair Token Distribution Mechanism Subnet tokens are gradually distributed through the "Fair Launch" model to ensure that the team needs to gradually obtain token shares through long-term contribution and construction. This mechanism avoids tokens being Risk of quick sell-off, while encouraging the team to focus on technical improvement and ecological construction

Dynamic TAO balance between users and verifiers. The resource allocation is not only determined by the market, but also affected by the joint efforts of verifiers and users. Verifiers need to strictly evaluate the team's technical capabilities, market potential and actual performance by staking TAO. and participate in market transactions to further promote the formation of the subnet's market value

Economic model analysis

Current funding support data shows that subnets in the current network can receive an average of approximately US$47,000 in rewards per day, corresponding to an average annual support of approximately US$17 million, which is much higher than this level of funding. The median value of seed rounds (approximately US$3 million) and Series A financing (approximately US$14 million) for traditional AI startups has provided a strong boost to the rapid development of the subnet.

Future potential The current annual budget of Bittensor is expected to reach US$1.3 billion, which is comparable to centralized AI such as OpenAI and Anthropic.research institutions. With the launch of dynamic TAO, the new issuance of TAO in the future will mainly flow to the liquidity pool of subnet tokens, further promoting the circulation of capital and value within the ecosystem.

Long-term incentives The design of dTAO greatly motivates the team to continuously improve its technology and applications by linking circulation volume with market performance. This mechanism also inhibits the short-term behavior of quickly cashing out through over-the-counter transactions (OTC), laying the foundation for the long-term sustainable development of the network.

Impact and significance

Resource allocation optimization

dTAO dynamically adjusts resource allocation through the market to ensure that subnets with high utility and high growth potential receive more resources. This mechanism not only improves the overall efficiency of the network, but also promotes competition and innovation.

Decentralized AI ecological construction

Bittensor is not only a decentralized AI network , and has become an incubation platform for AI networks through dynamic TAO. Competition and collaboration between subnetworks further promote the development of the decentralized AI ecosystem.

Incentives for ecological participants

Dynamic TAO balances users, verifiers and teams Benefits, ensuring that all participants can contribute to the growth of the network through economic incentives.

Improvement of the role of verifiers

Verifiers need to play a more important role in the network . They strictly evaluate the value and potential of subnets in a manner similar to venture capital to ensure the scientificity and rationality of network resource allocation.

The launch of dTAO marks a major advancement in the decentralized network resource allocation mechanism. Through market-oriented dynamic adjustments, embedded liquidity pool design and fair issuance model, dTAO achieves efficient and fair resource allocation. In addition, as an AI network incubation platform, it not only empowers the development of subnetworks, but also provides a new development path for the future of decentralized AI networks.

Agents application on Bittensor

Many people say that Bittensor is an AI coin represented by VC dignitaries and has lagged behind today’s It is an era of applications where a hundred flowers bloom in the developer framework ecosystem of major agents. With the recent rise of the AI ​​Agents craze, and the total market value of AI Agent-related tokens exceeding US$10 billion, projects represented by the Virtuals ecosystem, in particular, account for US$5 billion in total Marketcap market capitalization (including various practical categories). Investment and investment research analysis agents, such as $AIXBT, $VADER, $SEKOIA, etc.), Bittensor seems to be being left behind in the eyes of many people.

However, in fact, Bittensor still has many "Alpha". What many people don’t realize is that Virtuals/ai16z’s success in consumer AI agents complements the Bittensor subnet’s efforts in decentralized AI infrastructure.

As Agents’ TVL (Total Locked Volume) and influence expand, powerful training and inference infrastructure becomes more important.

Currently, Virtuals and Bittensor have carried out many ecological cooperations.

Many consumer-facing virtuals protocol agents are powered by the Bittensor subnet, leveraging TAO The computing power and data ecosystem create new possibilities, such as

$TAOCAT

TAOCAT is a Virtuals ecosystem developed by Masa The main role of the artificial intelligence agent created is to serve as a staunch defender of TAO, actively participate in discussions on X, and speak out for the influence of TAO.

TAOCAT leverages subnet 42 Masa’s real-time data infrastructure, and BittensorThe advanced LLM provided by subnet 19 competes for TAO token distribution in the Agent Arena on Bittensor subnet 59, creating a new paradigm of tokenized AI value capture. Any user interaction on X will become training data for TAO Cat .

Other projects supported by the Bittensor subnet are:

$AION: The first Agent that can predict prediction results and participate in prediction market betting, the copy-trading copy trading function will also be launched soon

$SERAPH: The first project focused on verification infrastructure to certify the wave of AI Agents that are about to overwhelm our digital world.

The cooperation between Virtuals and Bittensor proves that huge practical value can be created based on Bittensor infrastructure. With the official launch of AgenTAO (SN62), this will become an important milestone for automated software engineering Agents on Bittensor. All Bittensor subnets will gradually be developed by Agents on Bittensor. In the future, we will see more application-side AI Agents emerging from the Bittensor ecosystem!

Source: taogod

Conclusion

The future of Bittesor is exciting, with many specifically surrounding Bittensor Ecological research and investment institutions began to appear, similar to the Ethereum network. Including the DCG founder’s orders, podcasts, blogs, and OSS Capital, which focuses on Bittensor investment. It is dedicated to studying the Bittensor ecology and is a subnet research organization. A network of people similar to the Paypal gang’s Bittensor has been formed. , Contango, Canonical, Delphi Labs and DCG recently held a gathering, many experts in the Crytpo x AI fieldExperts have also begun to rely on Bittensor and support it. Therefore, it is not unreasonable for Bittensor to surpass Virtuals on Kaito’s mindshare some time ago. Passing Virtuals is actually not unreasonable.

Source: BitMind Bittensor Subet 34

Next year in April 2025, Austin, Texax Bittensor will hold a 300+ person The Endgame Summit conference and hackathon, specifically focused on introducing more subnets. Validators and miners join the bittensor ecosystem and expand its territory.

Endgame Summit

Of course, whether it is a centralized AI project or a decentralized AI project, the final standard will return to the product. At present,

Bittensor's ecosystem has emerged and is blooming.

Source: Outpost AI Research

Recently, the founder of Bittensor summarized the main achievements of various subnets of Bittensor in the past year on his personal X:

Source: https://x.com/const_reborn/status/1873359385373909008

So, let us continue to look forward to Bittensor and see what products will be available in the future. Use cases can be run from Bittensor and serve as tools for people looking for solutions to specific AI problems.The place of choice!