Dynamic TAO: 5 facts you need to know

Written by: Subnet Edge

Intro

Dynamic TAO changes the role of TAO in the network.
Before, validators decided.
Now, every TAO holder chooses.
It looks technical, but it reshapes the value of subnets.

1. How it works

• Each subnet issues its own token, the alpha.
• Staking TAO on a subnet = receiving alphas.
• Their value depends on the utility and economy of the subnet.
• Subnet Zero is the exception: staking happens directly in TAO.

2. The law of extremes

• 20% of subnets will generate 80% of the value.
• 4% will generate 64%.
• 1% will capture about half.
• Expecting most alphas to hold value is unrealistic.

3. The hidden constraint

• When 1 TAO could be worth thousands, every placement in a subnet must deliver solid returns.
• Relying only on new entrants won’t work.
• Subnets without sustainable revenue will collapse.

3 bis. The economy under debate

• Arrash’s collateral-based design is circulating as open source for subnets.
• In the community, debates focus on buybacks, burns, redistribution, DAOs, or stablecoin dividends.
• Some see these as necessary steps, others warn of circular schemes.
• The implicit takeaway: D-TAO alone is not enough. Subnets need viable economic mechanisms to sustain alpha value.

4. What draws attention

• Some areas are attracting more capital and experimentation.
• Chutes, Ridges, MANTIS, Affine, Nova, IOTA are among the subnets under close watch.
• The common thread: aiming for concrete use cases with models that generate value beyond emissions.

TL;DR

• Dynamic TAO = every holder chooses where their TAO goes.
• Most subnets will fail.
• Only those with durable economies will survive.
• The community is already exploring new economic models to strengthen alphas.
• Subnets drawing attention include Chutes, Ridges, MANTIS, Affine, Nova, and IOTA.

CTA

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