TAO makes TAO waste! Messari researcher dissects Bittensor's network effects
Original article: "Breaking Down Bittensor's Network Effects" Author: Seth Bloomberg (Messari Researcher) Compiled: Zombie Messari Researcher Seth Bloomberg recently published an article on X, detailing the network effects of Bittensor and potential bottlenecks for future development.
The following is the original compilation:
Due to the recent discussions about Bittensor, I would like to share my views and some concerns about it.
Thanks to Saypien (former Messari executive) for the extensive discussion on this topic, and also thanks to Sami Kassab (former Messari researcher), I know he will come to point out my mistakes here.
A basic layer network must establish network effects to succeed, in order to attract and retain users and developers. For smart contract platforms like Ethereum, network effects come from on chain liquidity and stable execution capabilities. For Bittensor, its current network effects come from:
1) Familiar with AI/ML developers who mine on the internet (i.e. developers who create AI models and services);
2) A deep liquidity TAO market that can absorb the selling pressure of tokens. Usually, less mature networks are more susceptible to token selling pressure.
Due to the widespread applicability of (2) to most encrypted networks, I will primarily focus on (1). Specifically, the network effect or flywheel effect generated by (1) is as follows: the new subnet benefits from experienced AI/ML Bittensor developers who continuously produce high-quality results → AI/ML engineers benefit from continuous TAO token issuances. It can be expected that the revenue from TAO tokens, combined with Bittensor's AI/ML talent, will continue to attract more subnet builders, thereby attracting more AI/ML talent and forming a cycle.
Whether you are bearish or bullish on TAO, it is worth exploring how this network effect may collapse. So, let's get started.
Scenario 1: TAO token revenue<operating expenses
AI/ML talents are attracted to the internet because the TAO token returns they receive exceed their operating costs on Bittensor. Mathematics is simple: there is no need to raise a large amount of funds, acquire customers, or generate income. Just integrate the model into Bittensor's subnet and earn TAO token issuance revenue. The assumption of this model is that your earnings (based on current or expected TAO value) should be able to cover your expenses denominated in US dollars. If this account is not established, AI/ML talents will choose to leave Bittensor and seek other opportunities.
Scenario 2: Opportunity Cost Calculation
Imagine you are a skilled AI/ML developer on Bittensor, or you are a small team of two or three AI/ML developers building projects on Bittensor. At some point, you have to ask yourself: 'What is the opportunity cost of continuing to be a miner here?' Well, you know the upside benefits of staying on Bittensor only come from the issuance of TAO tokens and the rise in TAO token prices. With the benefits on this side, you also need to consider the other side: whether creating a new protocol without Bittensor can bring greater benefits? I know... this may be considered 'blasphemy' for some people, but if you don't consider this, then you're not taking responsibility for yourself.
Bittensor has realized the need to provide additional incentive benefits for subnets and their miners. 'Dynamic TAO' seems to be their approved solution.
It is currently running on the testing network, so it is likely to be launched by the end of this year or early next year. Through dynamic TAO, each subnet will have a fund pool similar to Uniswap V2, which will pair and price subnet tokens with TAO. The 'dynamic' aspect of this upgrade lies in the new dynamic TAO token issuance model: the more TAOs pledged in the fund pool, the more TAO tokens allocated to subnets, and the higher the price of subnet tokens. It sounds very cost-effective. AI developers can gain appreciation of subnet tokens while retaining their advantage in the Bittensor ecosystem (i.e. TAO token issuance).
However, pairing subnet tokens with TAO for pricing will set an "artificial upper limit" on the valuation of individual subnet tokens. Ethereum and its L2 or Helium and its subDAOs also have similar token dynamic relationships. This is where opportunity cost calculation comes into play. If you are one of these powerful AI/ML developers or subnet owners, why limit yourself in the way mentioned above? Why not just establish your own protocol or network? I dare say that some venture capitalists may be eager to fund you after seeing a bunch of mediocre AI and encryption projects, and this valuation may be higher than a rigorously designed subnet. Or even better, you have accumulated a large amount of TAO during mining, and after calculation, you believe that you can self fund to establish your own protocol, attract some applications, users, and revenue, and then consider external funding (which is rare today).
In my opinion, this is the long-term challenge Bittensor needs to face - designing mechanisms, incentives, and ecosystems to retain the best AI/ML talent.
I think a recent tweet from mrink0 (Delphi Digital researcher) also hinted at this issue (if not, please forgive me for taking it out of context; if there is an error, please correct me). In my opinion, people like Nous (open-source AI research organization Nous Research) leaving Bittensor to build their own networks indicate that for some Bittensor developers, the incentive to stay in Bittensor is currently not enough to compete with building and publishing their own networks.
Addendum:
After mrink0, in Seth Bloomberg's comment section, he pointed out that he agrees with most of Seth Bloomberg's views and stated that the key challenge will be whether Bittensor can attract a model that can solve the problem of people being willing to pay. Otherwise, it will only be (temporary) token emissions.
Seth Bloomberg gave the following response to this:
Even if the model solves the problem of people being willing to pay, miners may not necessarily benefit from it in any way. People will pay for applications or products that use these models, but the protocol does not define any mechanism for miners to share these benefits. The worst-case scenario is that the demand for miners increases (inference costs rise), but they are unable to generate any income from these applications or products. The income of Bittensor miners cannot increase with the demand or revenue of the applications they serve.
(责任编辑:时讯)
-
他们在去年12月上线的娱乐搞笑短视频系列“歪果仁研究会”,有好几个在b站上已经点击过百万,在微博上总播放量有几千万,微博账号“歪果仁研究会”4个月也吸引...[详细]
-
路维光电(688401.SH):10月未通过集中竞价交易方式回购公司股份
上述我们仅仅以转化项目“订单成功页”为大家分析了如何根据数据调整优化广告位,当然这并非是唯一依据,站内广告分析可以分析到其它的转化项目,如图所示: 从上图我们可以看出,还...[详细]
-
4.网站优化知识 网站优化被更多人熟知的还是:内容为王,外链为皇,但远远不止这些,在保证内容和网站结构的基础上多建设网站内外链,合理布局网站结构,优化网站代码和关键词分布,最大化的便于搜索引擎抓...[详细]
-
IPv6概念31日主力净流出1.28亿元,中兴通讯、神州泰岳居前
内涵型标题要求标题新颖内涵丰富,比较适合案例、深度类型的文章,可以尖锐的语气,可以反思的语气,也可以是比较的语气,利用好的标题来提高用户的关注度。...[详细]
-
Avalanche Game 计划进军 Steam 平台,NFT 销量持续升温
笔者的稿子就曾经多次被机器建议“修改标题”。...[详细]
-
如果你把domain查询出来的反向链接域名当作是自己网站的外链那你就对于SEO的基础性知识点了解的太片面了,因为如果我做的是锚文本外链,使用domain你根本检索不出来...[详细]
-
黄金仍处牛市初期?原油恐存深度回调风险 | Live分析更新中
这种方法需要将网站中的内容整合起来并作实际决策。...[详细]
-
然而《王者荣耀》却不同,它起源于中国,它定位于社交化和休闲化,所以它可以弱化故事背景,并且它所瞄准的目标人群是青年人甚至是十几岁的少年人,而且男女都有,那么它只需要思考着什么样的英雄和背景故事适合...[详细]
-
document.writeln('关注创业、电商、站长,扫描A5创业网微信二维码,定期抽大奖。...[详细]
-
理才网创始人陈谏作为中国HRSaaS领域资深老兵,曾任用友、金蝶等国内大型上市公司高管,先后主导了国内四代企业管理软件和互联网应用的研发。...[详细]