State of Bittensor #6

In recent months, Bittensor and $TAO have made remarkable strides. The launch of Bittensor's unique feature, the subnets, marked a significant milestone, and the market began to recognize the technological innovation that Bittensor represents.

The only blockchain for AI applications is rapidly becoming its universe. This has made it hard to keep up, so we have decided to write a monthly "State of Bittensor" to keep our community updated on the latest and greatest from Bittensor's growing open-source community of builders. Let's get to it.

TL/DR

• $TAO stats
• Subnets
• Bittensor Hack
• Closing thoughts

$TAO stats

$TAO price action

Over the past month, $TAO has ranged from $200 to $325. Based on the market cap, Bittensor is now the 52nd biggest project.

$TAO and $WTAO holders

As the network grows, the number of $TAO (and $WTAO) accounts have grown. In total, there are now roughly 97,000 token holders!

Staking stats

Currently, 80% of all circulating $TAO is staked. This is partially why $TAO is so volatile, as the floating supply is low, meaning there aren’t that many tokens available when demand increases. The staking APY is 17%, while validators rake in 19%.

Subnets

Simply put, subnets are network components specialising in a specific AI-related task that the entire Bittensor ecosystem can use. Since the essential network feature went live, the maximum number of currently available subnets, 32, has been reached.

The Bittensor team recently decided to raise the Subnet Limit from 36 to 45, aiming to enhance network stability and infrastructure. Previously, the 32 subnet limit led to frequent deregistrations, putting pressure on Subnet owners and miners to quickly turn profitable. This adjustment addresses those concerns, with plans to eventually reach 1024 subnets.

Increasing the subnet limit provides Subnet owners with more time to innovate and stabilize their operations, reducing the risk of deregistration. Many teams struggled to achieve stability within the previous constraints, leading to rapid deregistrations. This update allows for a more gradual and manageable process. Moreover, it affords validators more time to assess subnets without the fear of immediate deregistration pressures.

Miners benefit as well, gaining additional time to optimize their models within a less competitive environment. With more available subnet spaces, deregistrations occur less frequently, offering miners greater stability and opportunity. Additionally, the expanded network capacity encourages broader miner participation, further decentralizing the Bittensor network.

Subnet in the spotlight: LogicNet

LogicNet-Subnet is a decentralized network utilizing the Bittensor protocol to advance AI and machine learning models in mathematics, computational thinking, and data analysis. This document guides validators and miners on how to set up, operate, and contribute to the network.

LogicNet aims to host a fine-tuning competition for AI/ML models specializing in mathematics and computational reasoning. It also seeks to develop a revenue-generating subscription service through a front-end Math and Data analytics LLM application, utilizing real user feedback and response rating. Additionally, LogicNet will open-source and fine-tune a custom AI/ML model trained on a robust dataset, including a cleaned MIT-IDSS mathematics dataset.

The primary objective of LogicNet is to provide real-world users with an ever-improving AI/ML model capable of handling complex mathematics and data analytics. This model will adapt to the user's education level and offer clear justifications for its results.

LogicNet's products include an open-source specialized mathematics ML model trained on various datasets, including proprietary data from the MIT Institute for Data Systems and Society (IDSS). The Hugging Face Leaderboard will be used for fine-tuning the model, allowing miners to compete with custom models. The front-end application will generate revenue through a subscription-based business model.

Key features of LogicNet include an advanced computational network that incentivizes miners to enhance computational resources for complex AI/ML tasks. Miners commit to a specific model type and task volume.

The reward formula is based on accuracy, reasoning, and time scores, with the following breakdown: reward = (0.6 * accuracy_score) + (0.3 * reasoning_score) + (0.1 * time_score).

The accuracy_score is based on the correctness of the result, the reasoning_score measures the similarity between the generated text and reference data, and the time_score is derived from the time taken to generate the result.

LogicNet is committed to continuous improvement by introducing new models and features based on demand. Validators can earn by sharing their computational resources with miners, ensuring the network remains robust and efficient.

Bittensor Hack

Bittensor recently completed its first stress test during the Bittensor Hack event. This breach resulted in the theft of approximately $8 million worth of TAO tokens. This incident prompted the immediate suspension of network operations as the team responded to the attack detected on July 2, 2024. The breach affected multiple user wallets, with one wallet losing 32,000 TAO tokens. In response, the network was swiftly placed into "safe mode," halting transactions while allowing block production to continue, aiming to prevent further unauthorized access and mitigate potential losses.

The exact cause of the breach is still under investigation, but initial findings suggest it may have been due to a leak of private keys. This aligns with a broader trend in cryptocurrencies, where such vulnerabilities have become increasingly common. According to Merkle Science's "2024 Crypto HackHub Report," over 78% of stolen digital assets in the previous year resulted from private key leaks, amounting to approximately $2.5 billion.

The security breach had an immediate impact on the TAO token's market performance, causing its price to drop sharply by as much as 15%, falling from $281 to $237 following the announcement of the hack. This volatility underscores the market's sensitivity to security incidents and the potential loss of investor confidence.

Reopening

The Opentensor Foundation has announced plans to reopen the Bittensor network following the security breach. Scheduled for July 12 at 5:00 PM US Eastern Time, this reopening follows initial steps taken on July 9 with the availability of the schedule_coldkey_swap extrinsic. Initially, only specific mainnet functionalities will be accessible, including set_weights, serve_axon, set_commitments, set_root_weights, and schedule_coldkey_swap, until the full reopening. The Opentensor team emphasized ongoing testnet availability for the schedule_coldkey_swap extrinsic and addressed arbitration procedures for conflicting coldkey swaps. This update aims to restore normal operations while enhancing security measures and rebuilding community trust in the wake of the incident.

Moving forward, the Bittensor team will need to focus on enhancing their security protocols and rebuilding trust within their community. The incident serves as a reminder of the ongoing risks in the digital asset landscape and the need for continuous improvement in security practices across the cryptocurrency industry

Closing thoughts

The Bittensor ecosystem is just getting started, with subnets gaining more and more traction. All 45 subnet slots have been filled in this short time, with the subnet ecosystem updates coming and expansion to 1028 subnets in the coming years.

Bittensor is rapidly becoming a microcosm, and we can’t wait to see what AI products get released next. It will also be interesting to see how long it will take before the subnet competition starts to become fierce, with subnets feeling the pressure of being replaced. We’ll keep you in the loop until next month!

If you’d like to receive next month’s State of Bittensor, subscribe to our newsletter here!