DMM & Subnet

TensorUSD operates on subnet architecture of Bittensor to peg TUSDT for USD dollar by implementing Decentralized Market Making (DMM) protocol. Currently SN113 is used for DMM protocol in 3 core functionalities.

a) Dynamic Supply Rate of TUSDT through Subnet:

Subnet-level emissions operate as a dynamic supply rate on the maximum feasible circulating supply in real-time. This supply constraint is coupled to subnet emission, which represents the protocol’s partial overcollateralized value base and underwrites redeemability. Users are able to exchange 1 TUSDT for 1 USD under this mechanism. In this design, monetary expansion is therefore not treated as an exogenous parameter, but as an endogenous function of the subnet’s capacity to maintain overcollateralized backing and reliable convertibility.

b) Miners as Market Makers and Liquidators:

Miners serve as decentralized market makers and liquidators. They are tasked to preserve the Asset Backing Collateral Vault (ABCV), TUSDT peg, and sustain a healthy market through liquidation of risky vaults. Through validators, miners are instructed to take actions like buying or selling SN113 alpha, reallocating liquidity across vaults, adjusting quotes, and participating in liquidation processes when collateral positions breach risk thresholds.

c) Contribution Mapping Weights:

Validators coordinate this decentralized market-making layer and impose accountability through performance measurement. They assign protocol-level tasks to miners, define evaluation criteria linked to peg maintenance and solvency targets, and assess each miner’s contribution using observable outcomes (e.g., stabilization of the TUSDT price around its target, improved market depth, reduced spread volatility, lower slippage, effective liquidation execution, and preservation of overcollateralization). Based on these assessments, validators allocate weights that determine miner rewards.