Subnet
Introduction
TensorUSD Subnet SN113 that enables decentralized liquidity provision for TAO-backed stablecoins. Built on the Bittensor network, it uses a miner-validator architecture to create a trustless marketplace where liquidity providers (miners) also known as Decentralize Market Maker (DMM) fulfill buy and sell orders for ALPHA tokens in exchange for rewards.
Position in the Bittensor Ecosystem
Bittensor is a decentralized network coordinating machine intelligence through blockchain-based incentives. TensorUSD operates as a subnet within this ecosystem, focused on liquidity infrastructure for TAO-backed stablecoins.
What is TensorUSD Subnet?
TensorUSD Subnet is a specialized network that:
Provides liquidity between TAO and ALPHA tokens
Incentivizes participation through performance-based rewards
Ensures quality using validator scoring
Maintains decentralization through cryptographic verification
Core Value Proposition
TensorUSD offers a decentralized alternative to traditional liquidity systems:
No centralized liquidity pool
Miners compete to provide better service
Validators enforce fairness
All activity is verifiable on-chain
Subnet Architecture
The TensorUSD subnet consists of four main components.
Core Components
Miners (Liquidity Providers)
Miners hold TAO and ALPHA tokens, fulfill orders, execute on-chain transactions, and earn rewards based on performance.
Validators (Quality Assurance)
Validators score miners using EMA-based metrics and set weights on the Bittensor chain.
Gateway (Coordination Hub)
The gateway distributes orders, authenticates miners, tracks order states, and supplies performance data to validators.
Bittensor Network
The blockchain layer that registers participants, executes staking operations, and distributes emissions.
Benifits of Subnet to:
Miners
Earn Rewards: Generate income by providing liquidity
Flexible Participation: Sets own limits and availability
Transparent Scoring: Understand exactly how you're evaluated
Decentralized: No central authority controlling your participation
Validators
Support Network: Contribute to subnet health and fairness
Earn Emissions: Receive rewards for validation work
Influence Quality: Help maintain high standards across the network
End Users
Decentralized Liquidity: Access liquidity without centralized exchanges
Competitive Service: Miners compete to provide best execution
24/7 Availability: Global network of liquidity providers
Transparent Execution: All transactions verifiable on-chain
Ecosystem
Decentralization: Reduces reliance on centralized liquidity providers
Innovation: Demonstrates new models for DeFi infrastructure
Scalability: Can grow organically as more miners join
Resilience: No single point of failure
Net Flow–Based Performance Evaluation
To ensure reliable liquidity provision and consistent order execution within the TensorUSD lending and liquidity subnet, miner performance is evaluated using a Net Flow–based scoring system. This mechanism directly measures a miner’s ability to accept and successfully complete liquidity or lending orders.
Net Flow Calculation
Interpretation:
Lower Net Flow = Better Performance
A net flow close to zero indicates that a miner completes most of the volume it accepts.
A higher net flow indicates unfulfilled commitments and poor execution reliability.
Behavioral Outcomes:
Miners who accept and complete liquidity requests efficiently maintain a low net flow.
Miners who over-accept but under-deliver accumulate a high net flow, reducing their score.
This directly discourages speculative or unreliable order acceptance.
Exponential Moving Average (EMA)
To avoid penalizing miners for short-term disruptions while still capturing long-term behavior, the subnet applies an Exponential Moving Average (EMA) to net flow values.
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