Cryptig

I keep seeing comments in subnet chats like "revenue is a meme". So I thought I'd share a few observations. In no particular order: When a subnet is launched, this is akin to a private company IPOing. The subnet tokens (alpha) is then available to trade and the subnet is public in every sense. It has a 4 month immunity period where the subnet has to get its shit together and show/prove/convince the market that their alpha is worth buying. If in 4 months the subnet hasn't convinced the public/market that they are worth buying, there will be more sells than buys, emissions will be 0% or close to it and their alpha price declines. Eventually, they will have the lowest price and then be de-registered. Game over. Whatever percentage of the alpha supply a holder has, they will get that amount of TAO that was in the liquidity pool. So what's the game or arena here? The game is to create a subnet that provides value. In whatever shape or form that may be. It needs to show/prove to the market (dTAO investors) that what they are doing is going to be good. In my personal opinion, there really are only 2 subnet categories. You can either be a business or a research lab. That's it. There's no real in-between here. It's much like the FTSE or S&P500. Those companies are businesses. They make revenue and profit and the market buys their stock based on those metrics and forward looking metrics. What you don't find in those market places (indicies) are Harvard University or some independent research lab. The research labs you may see are actually research labs that have turned into businesses and are now selling/monetising the fruits of that research. I think it's naive to think that dTAO is any different. You can either be a Business Subnet that can use Bittensor to build your product/service and show people that your product or service is going to be raking in lots of revenue and have some alpha buyback plan in place. Therefore showing that value is being driven back into your alpha. ORRRR you can be a research type subnet. Which is great. I truly believe it's the research subnets that will one day punch OpenAI in the face and they won't be able to catch up. Or for a subnet to make game-changing advancements in AI. BUT, yes, there is a BUT...these research subnets need time. They need time to work on their game-changing stuff which requires money. In the real world, research labs have a benefactor. For instance it could be a pharmaceutical company willing to burn $20m a year on R&D with the goal of discovering a new drug in 5-10 years where they can make billions. But what about Bittensor research subnets? What if a great potential subnet needs 5 years to build/moon? At some point, the market will work this out. Game Theory Optimal thinking will kick in and investors will naturally come to the conclusion of "I love the subnet and what they're doing. They're a great team, but they're X years away from breaking out and being able to drive real value to their alpha. So I'll just buy in closer to the time... In the meantime, I'll just buy subnets that are making revenue and doing regular buybacks". A normal retort to this is that it doesn't matter, the APY from holding for 3-5 years will massively put you in profit, even if TAO price goes down and alpha price goes down. To which I completely agree. But 99.999999999999% of dTAO investors will never buy a subnet and sit on it for 3-5 years. For the average dTAO investor, 3-5 months is like 3-5 years... To the purist, this all sounds like blasphemy I know. But when dTAO was created in Feb 2025, I repeatedly said that many big, well respected and high priced subnets would quicker enter sustained periods of "down-only-chart-mode"...which many people disbelieved. But it happened... So back to the same question of what's the game/arena here? Well, the rules have now changed. And will likely change again this year. We now have a capped number of subnets, deregs, a rising dereg price, chain buying and net TAO inflow. Which is great! I love that there's a confined pressure cooker now forcing subnets to be better. If the cap were to lift, that pressure/forcing function would dissipate. But what this means is that for a subnet to get LP emissions, it needs constant buying (net TAO inflow). So because of all these game conditions, for the INVESTOR, there are different GTO moves here. Now isn't the place to expand on these moves, but basically, if there is a Business subnet that can get product market fit, attract revenue and do buybacks, that subnet will DOMINATE the subnet leaderboard and emissions. Even better if that subnet has great alphanomics as well like Hippius and Vidaio. Whereas a Research subnet will need either: i.) Constant community support to keep on buying it, knowing there are years before alpha value becomes evident. OR, ii.) A massive benefactor like Const. He has gone from 75% in root to 59.5% in root in about a month and will continue to allocate into subnets that are good for Bittensor. This is great! But what happens to the research subnets when that 172k TAO in root is gone and he's 0% root? What this means is that there's a finite window for research subnets to deliver. Is it 1, 2 or 5 years? No idea! Hopefully there will be other big entities that enter Bittensor with big money that can happily allocate with a long term horizon to help the long tail moonshot subnets. (Quick tangent, one things I've observed over the last 2 months is the dereg price continually moving up. It was 0.001T and it's currently about 0.0029T. This rising tide means subnets are rapidly trying to get buyer support or revenue for buy backs to avoid dereg. Mark and I have helped 3 subnets out of dereg so far as we genuinely think those teams didn't deserve to dereg, but we've stressed we can't just keep buying them out of dodge. They have to deliver as our funds are finite). So for the meantime, I don't believe Revenue is a meme. We are in the real world here and the easiest and quickest way to driving massive alpha value is making a bucket ton of revenue and doing alpha buybacks. People hate hearing this...but what's the alternative? Is this going to force some subnets to shoehorn in any old product to get to market quickly whilst sacrificing the big dream a bit? Most likely... Will investors eventually figure this all out and rotate more into the revenue generating subnets more? Most likely... Is there way LESS risk buying a low price/low liquidity subnet with a good team and soon to revenue product compared to a high priced subnet which has a lot further to fall? Most likely. Especially seeing as you don't get much of a haircut during dereg. Will zombie subnets that have done bugger all for 10 months continue to do nothing and do the odd buyback here and there to avoid dereg whilst building up their owner key reserve? And then eventually dereg with a minimal haircut? Most likely... Anywho, this is just my 2 cents. Don't shoot the messenger, these are just my observations. For the record, I'm so incredibly bullish on Bittensor and 2026 will be an epic year. There is simply too much talent and brains in this ecosystem for TAO to fail... In the meantime, these new game conditions are presenting investors some lovely GTO moves for their portfolio if they can figure it out...