: title: Bittensor: The AI Infrastructure Network

Bittensor is a decentralized AI network that allows AI developers to build and deploy machine learning models or other AI-related developments.

!output: Author: IOSG Ventures

Introduction

AI development has made tremendous breakthroughs in recent years due to advancements in data, computing power, and algorithm research, especially with the emergence of OpenAI GPT-4, which represents the arrival of foundational LLM large models, driving productivity improvements and transforming social efficiency.

However, the drawbacks of closed-source large models represented by GPT-4 have also become apparent, namely, centralized models often have limitations on third-party integrations, which undermine the scalability and interoperability of AI agents based on centralized models.

As a result, open-source large models like the Llama series have gained increasing popularity among researchers, but open source does not equate to transparency, and it also faces many challenges.

The main dilemma is that open-source AI development offers no economic incentives for most contributors. Even though some competition rewards exist, they are usually one-time, and subsequent improvement and development work still require passion, unless a large community of followers is built after reaching a certain scale, which could lead to more revenue opportunities and more contributors continuing to improve.

Therefore, the AI project Bittensor attempts to utilize web3 token mining to make open-source AI development more sustainable, verifiable, and efficient. Through Yuma Consensus, it aims to align resources with research parties (Miners), validators (Validators), and AI project parties (Subnet Creators), making the entire AI research process more transparent and decentralized, allowing anyone to contribute to AI and earn deserved rewards.

The performance of tokens in the secondary market also confirms people's expectations, with prices rising from over $50 in September 2023 to over $500 in December 2024, achieving a tenfold increase!

Recently, Bittensor's investor and founder of Digital Currency Group established an accelerator named Yuma, specifically to incubate subnet projects within the Bittensor ecosystem, and serves as CEO, demonstrating his confidence and potential in the Bittensor project.

Of course, the success of any project cannot be achieved without facing skepticism. Since the inception of Bittensor, there has been a lot of FUD. In this article, we summarize many unanswered questions and attempt to understand Bittensor's future positioning and potential in the decentralized AI space through research and analysis.

What is Bittensor?

Bittensor was founded in 2021 by a team from Toronto, Canada, including Jacob Robert Steeves, Ala Shaabana, and Garrett Oetken.

Bittensor is a decentralized AI infrastructure used by AI developers to build and deploy machine learning models or other AI-related developments. Many Web3 AI projects, regardless of whether they have their own blockchain, can connect to Bittensor's blockchain "subtensor" and become part of a subnet.

What is a Subnet?

Subnets form the core of the Bittensor ecosystem, with each subnet being an independent incentive-based competitive market. Anyone can create a subnet, customize the tasks it will perform, and design incentive mechanisms (in machine learning terms, the incentive mechanism can be understood as the target loss function, guiding model training towards ideal outcomes). By paying a registration fee (priced in TAO), one can create a subnet and receive a netuid for that subnet. Note that a subnet creator does not need to undertake the operational tasks within the subnet but can delegate the rights to operate those tasks to others.

Operating tasks within the subnet provides another way for others to participate, namely by joining an existing subnet. If joining an existing subnet, there are two ways to participate: as a subnet miner or a subnet validator. Besides paying a registration fee (priced in TAO, and validators also need to stake TAO), one only needs to provide a computer with sufficient computing resources and register that computer and their wallet to a subnet, while running the subnet creator's provided miner module or validator module (both modules are Python code within the Bittensor API).

How Does the Competitive Market of Subnets Work?

The operation of subnet competition works as follows: suppose you decide to become a subnet miner. Subnet validators will assign tasks for you to complete. Other miners in the subnet will also receive the same type of tasks. Once all subnet miners complete their tasks, they submit the results to the subnet validators.

Subsequently, subnet validators will assess and rank the quality of the tasks submitted by subnet miners. As a subnet miner, you will receive rewards (priced in TAO) based on the quality of your work. Similarly, other subnet miners will also receive corresponding rewards based on their performance. At the same time, subnet validators will also receive rewards for ensuring that high-quality subnet miners receive better rewards, thus driving the continuous improvement of the overall quality of the subnet. All these competitive processes are automated based on the incentive mechanisms coded by the subnet creator.

The incentive mechanism ultimately judges the performance of subnet miners. When the incentive mechanism is well-calibrated, it can create a virtuous cycle