New Bittensor Model: Reshaping Rewards to Ease TAO Sell Pressure

What Bittensor Is

For readers new to it, Bittensor is a decentralized network that tries to turn machine intelligence into an open market rather than a product owned by a handful of tech giants. Founded in 2019 by Jacob Steeves and Ala Shaabana through the Opentensor Foundation, it runs on the Subtensor blockchain and rewards participants in its native token, TAO, for contributing useful AI work.

This activity is organized through specialized “subnet” networks, independent artificial intelligence ecosystems within Bittensor that compete with one another to create valuable models, data, and services. Each subnet focuses on a specific task or area of artificial intelligence, and validators assess the quality of the results and direct rewards to the projects that create the most value for the network.

The 2025 dTAO upgrade pushed this further, letting TAO holders direct rewards toward the subnets they believe create real value.

The Price: A Violent Flush, Then a Sharp Recovery

The token’s recent chart tells a story of capitulation and rebound. TAO trades near $253, having reclaimed its 200-day moving average at roughly $248 after early-June sell-off that dragged it from around $260 on 31st of May all the way down to the $185 zone in a matter of days. That low established a clear support floor, and the bounce off it was sharp enough to pull price back above the 200-day line, a tentative signal that momentum may be shifting, led by broader crypto market gains, started by Iran-US peace agreement.

The structure is not clean yet. Price is still pinned below the falling 50-day average near $263 while trading at $253 at the time of writing on 17th of June, which now acts as overhead resistance, leaving TAO consolidating in a band between roughly $248 support and $260 to $265 resistance. With the RSI sitting at a neutral 53, the chart reflects a market that has stopped falling but has not yet proven it can break higher.

The Proposal: Validators as Capital Allocators

Against that backdrop comes a proposal, shared on GitHub and informally dubbed “Root Reborn,” that would change how the root layer works at a structural level. Currently, the returns for participants in root staking, the primary staking layer in the Bittensor ecosystem—are generated through the sale of subnet tokens and their conversion into TAO. It is precisely this mechanism that creates constant selling pressure on the subnet networks.

The proposal could reverse the flow. Instead of automatically selling subnet rewards, validators would decide which subnets deserve capital, reinvesting rewards into the ones they back rather than dumping them. The result would be a compounding portfolio of subnet positions that can later be redeemed for TAO, transforming the validator’s role from passive yield distributor into active investor.

Why It Matters

The shift is bigger than a tokenomics tweak. It would change Bittensor from a system that extracts value from subnets into one that recycles capital back into them, and the second-order effects are where it gets interesting:

Less sell pressure: subnet tokens would no longer face constant, automatic selling to fund rewards. Active investors: validators would behave like fund managers rather than reward routers. Capital follows performance: strong subnets would attract more funding, while weak ones would receive less. Skill-based yield: root staking returns would become tied to how well validators allocate capital.

Taken together, that starts to look less like a reward-distribution system and more like a decentralized asset-management network, one where capital flows, rather than governance committees, decide which AI subnets grow and which fade.

If it works as intended, the proposal could create a self-reinforcing loop: better subnets attract more validator capital, that capital supports subnet-token values, higher values generate larger rewards, larger rewards lift root staking yields, and higher yields draw more capital into TAO. In that framing, the change converts root staking from a value-extraction mechanism into a capital-allocation engine that strengthens the whole ecosystem rather than slowly bleeding it.

The Caveat Worth Keeping in Mind

For now, this is a proposal, not a shipped feature, and that distinction matters. A change this fundamental to how rewards and sell pressure work would need to clear technical review and community alignment before it goes live, and the actual impact would depend entirely on whether validators allocate capital wisely. Concentrating allocation power in a small set of validators, a known feature of Bittensor’s current structure, could just as easily channel capital poorly as well. The thesis is genuinely compelling, but it rests on execution that has not happened yet.

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