Note: This article was repurposed from JJ’s tweet.
In the Bittensor ecosystem, every subnet is its own economic universe. A self-contained network where miners, validators, and owners interact through an incentive mechanism (IM). But beneath all the complexity, there’s one unifying truth:
Every subnet is, at its core, a “mini-Bitcoin.”
Let’s break down what that means and why it’s the single most important concept for anyone building, mining, or investing in Bittensor subnets.
1. The Incentive Split Today
Currently, across most subnets:
- Owners receive ~18% of emissions
- Validators receive ~41%
- Miners receive ~41%
On Bitcoin, by contrast, miners receive nearly 100% of the incentive. There’s no pre-allocation to founders, no validator middlemen, and no special privileges. Only raw proof-of-work.
Even Satoshi, the creator, earned Bitcoin the same way as everyone else: by mining. His total holdings amount to roughly 5% of all Bitcoin mined, achieved entirely through participation and not pre-minting.
2. The Direction Bittensor Subnets Are Headed
As Bittensor matures, the healthiest subnets will evolve toward miner-centric designs, just like Bitcoin.
That means:
- No privileged allocations
- No asymmetric reward advantages for owners
- No arbitrary redistribution mechanisms
Instead, all incentives should be earned through measurable, verifiable work. This is the exact philosophy that made Bitcoin unbreakable.
The ultimate goal:
100% incentive to miners, with subnet owners competing as miners themselves.
That’s the definition of a perfectly balanced, air-tight incentive mechanism.
3. Precision Is Everything: Measure or Die
Here’s the golden rule of network economics:
What you cannot measure, you cannot incentivize.
If a subnet owner cannot precisely quantify the commodity or computation being rewarded, ideally at the same level of precision that Bitcoin measures SHA-256 hashes, the entire IM becomes unreliable.
Without that clarity, the subnet leaks value. It becomes vulnerable to speculation, inefficiency, and short-term hype cycles that eventually collapse.
Incentive mechanisms must therefore be granular, deterministic, and measurable. Anything less, and the subnet’s long-term sustainability comes into question.
4. Designing an Air-Tight Incentive Mechanism
An air-tight IM is one where:
- Rewards are purely tied to measurable output
- No participants have privileged access
- Owners can self-mine under the same rules as everyone else
That’s what Bitcoin achieved, and it’s what the best-designed subnets will replicate.
If a subnet owner can successfully self-mine their own network from launch, without exploiting any loopholes or hidden advantages, they’ve created a fair, sustainable, and value-retaining model.
5. The Hidden Lesson: No Burns, No Buybacks, No Leaks
When an incentive mechanism is perfectly balanced, token burns and buybacks become unnecessary.
Why? Because those mechanisms are often patchwork fixes for lossy IMs. Bitcoin doesn’t need buybacks or burns. Its value retention is built directly into its IM: transparent, consistent, and universally verifiable.
Bittensor subnets that achieve the same level of mechanical precision will naturally retain value without artificial interventions.
6. Latent Holdings’ Mission
At Latent Holdings, we’re working to help subnet owners achieve this exact standard, which is guided entirely by Bitcoin’s incentive design principles.
Our focus:
- Defining best practices for subnet IMs
- Establishing patterns and frameworks across today’s top subnet categories
- Ensuring subnet economies evolve toward true miner-driven fairness and sustainability
Because in the end, the measure of a subnet’s integrity isn’t its hype, it’s whether it can stand on its own, just like Bitcoin did.
Final Thought
If you can design a subnet where every participant earns purely through measurable work, and where the owner must compete fairly to mine their own token, you’ve built something indestructible.
That’s the essence of a mini-Bitcoin. And that’s where Bittensor is ultimately heading.
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