‘Talking Targon’ Ep. 01 With Const on eTAO and Subnet Economics

Bittensor is preparing to give subnet owners more control over how they distribute token rewards, potentially changing how projects manage their operations and grow their businesses.

In the debut episode of Talking Targon, Bittensor co-founder Jacob ‘Const’ Steeves joined Manifold Labs’ Thomas Angles and Matthew Karas to discuss eTAO (Expressive TAO), an upcoming protocol upgrade that introduces greater flexibility into subnet economics.

The conversation explored why eTAO is important, how Targon (SN4) plans to use it to expand its computing capacity, and what it could mean for Bittensor’s future.

What Is a Subnet?

During the conversation, Const described a subnet as a network operating within the Bittensor ecosystem, comparing it to a state within a country.

Each subnet has its own token with a maximum supply of 21 million and focuses on producing specific services, such as computing power, AI inference, or other digital commodities.

Anyone can create a subnet, and Bittensor currently supports 128 subnet slots. Under Bittensor’s traditional emission structure, newly issued subnet tokens are distributed among three groups:

1. Subnet owners (18%) receive rewards for operating and developing the subnet.

2. Validators (41%) evaluate miners’ work and distribute rewards based on performance, while sharing staking rewards with token holders.

3. Miners (41%) provide the computing power, AI models, or other services the subnet produces.

While some subnets have already reduced or eliminated their owner emissions to increase rewards for other participants, the standard distribution has remained largely fixed. This is one of the limitations eTAO is designed to address.

Introducing eTAO and Flexible Subnet Economics

eTAO (Expressive TAO) is a Bittensor protocol upgrade that allows subnet owners to decide how token rewards are distributed among miners, validators, and themselves.

eTAO Gives Subnets More Control Over Emissions as Gamma Development Advances

Instead of following the traditional fixed allocation, subnet owners can adjust emissions to suit their operations. The upgrade also lays the groundwork for future features such as token recycling and Gamma, which could allow subnets to purchase services from one another.

Owners can update their allocations approximately once every seven days. According to Const, eTAO has been in development for years, partly because of concerns about potential exploitation.

He explained that the upgrade is another step toward decentralization. Bittensor has evolved from requiring Opentensor Foundation approval to allowing anyone to create a subnet. Now, subnet owners are gaining more control over their economics.

The endgame is a fully permissionless network that does not depend on any single organization.

How eTAO Protects the Bittensor Network

Although eTAO gives subnet owners more flexibility, there are safeguards to prevent abuse and protect the wider network. These include:

1. Miner rewards: Miners must receive at least 33% of emissions.

2. Root stakers: The network protects the baseline rewards earned by TAO stakers on root.

3. Market protection: Safeguards help prevent subnets from manipulating emissions through illiquid token markets.

Const also explained that Bittensor uses emissions to build economic exposure to productive subnets. As these projects grow in value, the network can benefit from their success.

He compared Bittensor to an automated incubator that helps fund and support businesses while retaining a stake in the value they create.

What eTAO Could Unlock for Targon (SN4) and Other Subnets

During the conversation, it was explained that Targon’s fixed 41% miner allocation has limited how much computing power the subnet can incentivize.

With eTAO, Targon could increase miner rewards to over 80%, potentially doubling its computing capacity. This could help attract more hardware, increase revenue, and support token buybacks.

The discussion also explored how Targon could prioritize long-term token price appreciation over higher staking yields by reinvesting more of its resources into business growth.

Other subnets could take different approaches. Research-focused teams, for example, might allocate more emissions toward validation. The flexibility allows each subnet to structure rewards around its needs.

The Vision and Bitcoin’s Influence

Const described Bittensor as building on Bitcoin’s foundations, taking decentralized incentives beyond digital money to support networks that produce valuable services. eTAO represents another step toward this vision by giving subnet owners more control over their economics while maintaining safeguards for the network.

For Targon, this could mean expanding computing capacity and generating more revenue. Ultimately, the upgrade gives subnets higher flexibility to make economic decisions that support their long-term growth and sustainability.