Dynamic TAO has been online for 23 days. This article aims to identify current trends and strategies within the Bittensor ecosystem based on the latest market data.
TL; DR
- Thanks to the Dynamic TAO mechanism, the previously criticized “mine-withdraw-sell” issue in Bittensor has been significantly suppressed. This is reflected in the fact that the number of newly issued TAO is almost equal to the number of staked TAO, which has helped prevent TAO price declines.
- For TAO holders, directly staking in Root is an optimal investment choice with low risk, currently offering a Staking APY of up to 24.7%. Considering that the TAO price is at a historical low, even for non-TAO holders, purchasing TAO and participating in Root staking is a good investment option.
- For those with higher risk tolerance who want to achieve excess returns, it’s worth looking for Subnets with dedicated teams making consistent efforts, but whose Alpha token prices have not yet reached significant heights. The team’s investments will likely be reflected in their token prices.(All top 3 gainers in the past 24 hours have exceeded 100%)
- As a member of the first phase of 0xai’s Bittensor Subnet incubation program, Tensorplex announced on March 7 that it had received an investment from YZi Labs. This marks the first investment by the Binance ecosystem in the Bittensor ecosystem, symbolizing the gradual entry of the Bittensor sub-ecosystem into a new phase of prosperity.
TAO Long-Short Dynamics: From Mine-Withdraw-Sell to the New Market Structure
Setting aside the changes in the Dynamic TAO mechanism, the most direct market data changes already illustrate some market trends:
- After Dynamic TAO went live on February 12, the amount of Staked TAO has shown a significant upward trend line, with its growth rate even exceeding newly issued TAO during certain periods. This data proves that the previous “mine-withdraw-sell” pattern in the TAO ecosystem has been significantly suppressed now.
Combined with the mechanism changes of Dynamic TAO, we have reason to believe that “mine-withdraw-sell” will disappear for some time:
- Whether Subnet Owners, Miners, or Validators, they all need to maintain competitive Alpha Token Prices to continue receiving Emissions;
- Without considering external buying entering the market, the TAO increment that Emission brings to the Alpha Token Pool is slow. This means that these participants will not execute large-scale “mine-withdraw-sell” in the early stages, otherwise their future returns will be significantly discounted, and current operations would not bring significant benefits either.
Premium Investment Strategy: Root Network Staking
As we mentioned in our previous article, Root Network Staking is the only risk-free yield strategy for TAO Holders within the Bittensor ecosystem (with no drawdown in TAO terms, as Alpha Tokens received from staking can be directly sold for TAO). The market whales have demonstrated the value of this strategy through their actual behavior:
- The top Validators have allocated very significant portions to the Root Network, with 74.83%, 81.05%, 92.81%, and Polychain taking an extreme approach by staking 99.97% of their TAO to the Root Network.
- Currently, the Root Network Staking APY is 24.7%, which is significantly higher than ETH Staking (3.07%) and SOL staking (9.74%).
Considering our discussion in the first section about TAO’s price being at a historical low recently, even for non-TAO holders, purchasing TAO and participating in Root staking is a worthwhile investment option.
Excess Returns: Alpha Tokens with Continuous Development but No Price Pumps Yet
Referring to the data in the top right corner of the above image (top gainers), even in the current relatively quiet market conditions, the top three Bittensor Subnet alpha tokens by price increase have all exceeded 100% in 24-hour gains, with Tensorplex reaching as high as 240%.
Referring to the content in the first section, as long as a Subnet hasn’t been directly abandoned, whether it’s the Subnet Owner, Validator, or Miner, their strategy will likely involve dedicated development efforts and raising the Alpha Token Price over time to secure continuous TAO Emission, rather than dumping large amounts in the short term causing Alpha Token Prices to crash.
This way, the price trend of a Subnet’s Alpha Token will likely experience a phase of steady price increases similar to what the leading Subnet Alpha Token Prices demonstrated in their initial 10 days:
- Subnet 4 Targon Alpha Token rose by 99.14% in the first week;
- Subnet 51 Compute Subnet Alpha Token rose by 139.78% in the first week.
Based on this logic, finding Subnets in the community that are actively building but whose Alpha Token Prices haven’t been significantly raised yet could potentially yield excess returns. After all, since Subnet participants have invested significant human resources into development, raising the Alpha Token Price to obtain more Emission is just a matter of time.
Tensorplex: Data Labeling + dTao Trading Tools + Validator & LST
YZi Labs announced on March 7, 2024, that it completed an investment in Tensorplex, marking broader recognition of the value of Bittensor ecosystem subprojects.
As a deep participant in the Bittensor ecosystem, Tensorplex’s business has already taken on a matrix formation, primarily consisting of the following three parts:
Dojo Subnet (Data Labeling)
Dojo, as a subnet of Bittensor, aims to create an open platform for collecting human wisdom for AI/ML development.
Following YZi Labs’ investment in Tensorplex, its Bittensor subnet Alpha token price surged by over 240% in a single day;
Dojo Subnet’s core objective is to provide high-quality human data for AI (AKA Data Labeling):
- Validator: Generates tasks for miners based on synthetic order requests or external native requests, verifies miner outputs, calculates scores, and sets rewards;
- Miner: Earns revenue by completing tasks distributed by the Validator; to meet production requirements, it needs to gather and manage a pool of human contributors to generate data;
- Human Contributor: The core data source in Dojo’s business, this type of participant needs to solve specific Data Labeling Tasks, primarily human contributors; this is the biggest difference between Dojo and other subnets that only have Miner & Validator participation.
Backprop.finance (dTao Trading Tools)
Backprop.finance is similar to GMGN, not only providing various dimensional data for Subnet alpha tokens (with extremely high real-time capability), but also offering one-click trading functionality, greatly optimizing the user’s trading experience.
Currently, the trading interface’s UI/UX is more aligned with trading habits and information needs compared to taostats/taomarketcap and other front-end platforms.
Tensorplex Labs (Validator & LST)
Compared to other Validators, when staking with Tensorplex Labs, users also receive tTAO (an LST token issued on Ethereum) at a 1:1 ratio, helping users unlock the value of their token liquidity (currently 22.3% APY) while earning staking rewards, e.g., using tTAO to participate in DeFi to obtain additional value.
0xai Bittensor 1st Incubation Program Review
In February 2024, 0xai officially launched its first Bittensor Subnet incubation camp, an 8-week incentive program that injected new vitality into the blockchain ecosystem. After rigorous screening, 20 outstanding developers and project teams joined this journey.
During the incubation period, participants quickly demonstrated strong creativity and execution ability with the sharing and support from 0xai. Ultimately, after multiple rounds of communication with the community, three projects stood out and achieved remarkable results: Myshell and Kaito successfully released their Bittensor Subnets, while Tensorplex completed the release of its test subnet and subsequently launched the Dojo Subnet.
All three projects have since achieved impressive results in the capital market, with Myshell and Kaito both achieving Binance listings, while Tensorplex received investment from YZi Labs. The success of Myshell, Kaito, and Tensorplex is not only an affirmation of the participants’ capabilities but also strong evidence for the future development of the Bittensor ecosystem.
