Contributor: School of Crypto
The herd is coming. Chamath Palihapitiya is talking about Bittensor. His partner on the popular All-In podcast Jason Calacanis joined a Bittensor investment fund called Stillcore Capital with Mark Jeffrey and Rob Greer to accumulate as much TAO as possible. Legendary investor, entrepreneur, and writer James Altucher has also gone all in on TAO and his Treasury is the largest public holder of the coin.
These are all bullish developments, but one question still needs to be addressed. How will the Bittensor ecosystem be able to onboard millions of investors and decrease the friction of participating in the network? Subnet 10: Swap has a plan to swiftly migrate eager TAO investors from the comfort of their preferred blockchain networks.
How does Swap work?
Swap specifically wants to solve the problem of friction investors experience when trying to invest in alpha subnet tokens on Bittensor. There’s an arduous process of acquiring TAO off an exchange, sending that TAO to a Bittensor wallet, then swapping for Alpha tokens. Most prototypical investors don’t want to jump through so many hoops in order to invest. They just want to swap some stable coins or ETH and have the process completed in one fell swoop.
To solve this issue, Swap has created a Uniswap v3 liquidity pool that can be accessed on Base, the widely used Ethereum layer 2 network. The pool consists of half TAO and half USDC. The process for buying a subnet token is straightforward.
All investors need is a Metamask wallet with some USDC. The user can simply swap that USDC for TAO on the taofi.com/swap web page. Under the hood, the USDC is bridged to Taofi’s USDC/TAO liquidity pool housed on Bittensor’s EVM, and in turn, swapped for the selected subnet token. The bridge used is provided by Hyperlane, which is heavily audited and secure. Consequently, that subnet token is staked via the Swap validator, and the user accrues a high APY based on the subnet’s emissions.
While there are multiple steps done in this process, all the user does is make a transaction via the Taofi page and everything else is taken care of. This is a simple workflow for the user, but how do miners get involved with this operation?
Miners
Miners on Swap simply provides liquidity on the USDC/TAO liquidity pool on the Bittensor VM. The more funds they provide, the higher the return is. Sam from Swap explained on the most recent Revenue Search that miners are earning as high as a 400% APY for their services. The return is so high because a whopping 75% of the swap fees are redirected to the miners allocating liquidity in the pool. The team is proud to have abstracted away the miner registration process. Miners can participate on Swap by just providing USDC/TAO in the LP while the Swap team neatly handles registration, hotkeys and other complicated processes in the background. The validators simply run the code to ensure the miners are fulfilling Swap’s incentive mechanism.
The only caveat to being a miner for Swap is managing the position and keeping an eye on the TAO/USDC market. If the non-stable coin asset is selling off then the value of the position goes down and the miner experiences something called impermanent loss. Participants have to be aware of the market fluctuations and understand the risks involved with providing funds in a liquidity pool and realize these dynamics clearly.
Swap alphanomics
Swap has a neat flywheel effect that encourages token appreciation in the long term. The team has flipped the fee switch in the LP and coded 25% of the Swap fees, amounting to around $30,000 to buy back the Swap alpha token. The total pool has reached $50 million in total volume with $150,000 in fees.
As more investors are onboarded into the TAO blockchain and more alpha tokens are being purchased, the volume and fees will continue to see an upward trajectory. Siam Kidd with DSV Fund also suggested that since the miners don’t have any out of pocket costs to mine, they won’t be forced to sell to cover expenses. These alphanomics bode well for the future value accrual of the Swap subnet token.
What’s the end game?
Swap team member Sam explained that the ultimate goal for the project is to have their trading product included on every decentralized exchange, front-end, and terminal in crypto. Their swap/bridge solution is currently live on Base as explained earlier. The team is planning on expanding Swap to Solana and Ethereum main chain in the future.
Another potential step Swap will take in the future is getting integrated on popular Trading websites such as Trading View. Currently the Bittensor blockchain doesn’t have the same canonical standards other blockchains have, so it’s tricky to set up. However, this could potentially be a feature to give traders more tools to analyze subnet token charts in the future.
The team is also working on a proper dashboard on their Taofi.com website that will display all the daily volumes of the USDC/TAO pool.
Ultimately Swap is a very integral subnet that plays a major role in the Bittensor ecosystem. There’s currently some resistance to enter into the Bittensor ecosystem. Swap allows everyday crypto users to bypass all the steps of buying TAO, sending to a wallet, and swapping into an alpha token in one quick transaction.
The cool thing about the Swap product is that users always have full custody of their funds. They also have full control to make the transactions to bridge into Bittensor and to bridge back to Base all from the comfort of the Taofi.com/swap website.
All in all, big players are entering Bittensor in huge droves. Now Swap will ensure that retail investors and other Ethereum/Solana users can follow suit with the whales. Are you ready for the wave of liquidity Swap will facilitate into TAO?
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