The “Root Reborn” proposal would allow TAO validators to direct capital toward selected subnets and reinvest rewards, replacing the current model that relies on selling subnet tokens to fund staking payouts. The proposal remains under review and has not yet been deployed.
A new governance initiative for Bittensor, the decentralized AI network behind the TAO token, aims to reshape validator incentives by turning them into active capital allocators, similar to fund managers.
Bittensor is made up of multiple subnets, each acting as a marketplace for specific AI functions and operating with its own token. TAO serves as the network’s core asset, with users earning yield by staking it to validators on the root layer, widely regarded as the safest layer for capital.
The proposal introduces a fundamental shift in how rewards are generated and distributed.
Under the current system, staking rewards are funded by selling subnet tokens earned by validators and converting them into TAO. This creates continuous sell pressure on subnet tokens, weighing on their prices.
The “Root Reborn” proposal, introduced by developer “unconst,” seeks to reverse this dynamic.
Instead of liquidating rewards, validators would allocate capital across a basket of chosen subnets. Rewards would be reinvested into these positions, creating a compounding portfolio that is restaked with the validator. Stakers would continue to receive yield and retain the flexibility to convert it into TAO at any time.
This approach could remove persistent selling pressure and shift the system toward net buying, potentially supporting subnet token valuations.
Validators would transition from passive reward distributors to active curators of capital. Subnets they support would attract more inflows, while weaker or less credible projects could see reduced funding.
The proposal has been submitted to Bittensor’s GitHub and is currently being tested on a testnet rather than prepared for immediate mainnet deployment.
An initial automated review highlighted two potential risks: a possible upgrade bottleneck when processing large datasets and a payout issue that could disadvantage stakers if a subnet shuts down. The author has indicated these issues have been addressed, with additional refinements planned before any mainnet release.
Over the past 12 months, TAO has declined approximately 28%, compared with a roughly 38% drop in bitcoin over the same period. Meanwhile, staking TAO currently offers an annual yield of around 17% for long-term holders.
