Within Bittensor, every subnet has a large structural seller. Miners earn tokens for their work, and they sell them to cover their costs. This is the case for every proof-of-useful-work network. However, that sell pressure has been a constant drag on every subnet token’s price since dTAO launched.

The Bittensor chain used to soften the price impact indirectly. It would use TAO emissions to inject liquidity into each subnet's pool, deepening the market without moving price. This was helpful as it mitigated the impact of miners selling, but didn’t remove the heavy head-wind.

Over the last few weeks, there have been a series of upgrades that have changed this, with the most impactful one being implemented yesterday.

The chain now splits emissions two ways. One part still deepens the pool while the other part goes straight into buying the subnet's own token. On many of the top subnets today, that buying covers 100% of miner emissions.

The largest source of selling in each of these subnets now has a buyer on the other side, sized to match. The structural drag that held these tokens down is being fully offset.

This turns Bittensor into a VC investing in the emerging leaders on its own network. The protocol uses its own inflationary TAO rewards to buy its application layer (i.e., subnets) tokens. And since each subnet is its own proof-of-useful-work network, the token price is tied to the subnet’s productive capacity. Meaning the token price sets the quality or quantity of that work. A higher price means larger rewards, which draws better workers, who produce better/more outputs.

So when the chain buys the token, it's funding better outputs. Better outputs attract more demand, which supports the token further. More demand for subnet tokens creates more demand for TAO, which ultimately gives the network even more capital to buy back with. Same bet any VC makes. Back the winners, and the value flows back.

If you believe in the top subnets, the network just started heavily buying them alongside you.

This content is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Unsupervised Capital holds a position in TAO and may hold positions in the subnet tokens or other digital assets discussed herein and may buy, sell, or change positions at any time. Past performance is not indicative of future results. Digital assets involve substantial risk, including potential total loss of capital. Consult your own advisers regarding any investment decisions.

Investment in digital assets and blockchain technology involves substantial risk and may result in partial or total loss of investment. Digital assets are subject to extreme price volatility, regulatory uncertainty, and market manipulation. Past performance is not indicative of future results. This memorandum is for informational purposes only and does not constitute investment advice, an offer to buy or sell securities, or a solicitation of any offer to buy or sell securities. Recipients should consult their own advisors before making investment decisions. This memorandum contains projections and estimates based on current expectations. Actual results may differ materially from those projected. All forward-looking statements are subject to risks and uncertainties. Unsupervised Capital Management, LLC makes no representations regarding the accuracy or completeness of information herein. Third-party information has not been independently verified. To the maximum extent permitted by law, Unsupervised Capital Management, LLC shall not be liable for any damages arising from this memorandum. By reviewing this memorandum, you acknowledge these disclosures. This information is subject to change without notice.

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