Controversies and Issues Surrounding the Bittensor Project

Although Bittensor claims to be a "fair mining" project, in reality, its underlying Subtensor is not a true PoW or PoS public chain, but rather a centralized system managed by the Opentensor Foundation, with an operating mechanism that is not transparent enough.

The so-called "Three Giants + Senate" governance structure is actually controlled by insiders or stakeholders. From the network activation in January 2021 to the launch of the testnet in October 2023, 5.38 million TAO tokens have been mined, but the distribution rules and flow of these tokens are not clear, and they are likely to be divided among insiders.

Based on the current issuance of 8.61 million, at least 62.5% of the TAO tokens are held by internal members and interest groups. With the verification nodes operated by the foundation and investors, the actual proportion may be even higher.

The staking rate of the TAO token has always remained between 70% and 90%, which means that at least $1.4 billion of TAO has never participated in circulation. Its real circulating market value may only be $600 million, far below the nominal market value.

The dTAO upgrade in February this year may have been aimed at providing early participants with an opportunity to exit liquidity. By issuing subnet tokens and positioning TAO as a base currency, it created an illusion of high returns to attract external funds. However, due to an enclosed ecosystem and changes in the market environment, this strategy did not achieve the expected results.

Since the launch of dTAO, approximately 300,000 TAO( worth 70 million USD) have flowed out of the root network and may be liquidated on centralized exchanges. This indicates that large holders are gradually exiting.

The dTAO model lacks attractiveness for subnet project parties, disrupting the original balance of interests. The subnet Alpha token finds it difficult to achieve effective circulation, forcing the project parties to rely on external income for buybacks to maintain the price, essentially working for the validator nodes. This model is damaging the ecological foundation of Bittensor.

Overall, the Bittensor project has serious issues in governance, token distribution, and economic models, raising doubts about its long-term sustainability.