Bittensor (TAO) Surges 100%, Eyeing $3 Billion Market Cap: Analyzing The Propelling Factors
07 February 2024 - 3:00PM
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Among the digital currencies focused on artificial intelligence
(AI), Bittensor (TAO) has recently gained significant attention as
the best-performing asset, soaring by an impressive 109% over the
past 30 days and achieving a market capitalization of $2.9
billion. To comprehend the driving forces behind this growth,
it is essential to understand what underpins the platform and the
catalysts that have captured investors’ attention, enabling it to
reach an almost $3 billion market cap in record time. Bittensor
‘Game-Changing’ Upgrade? According to Sami Kassab, a
researcher at Messari, Bittensor has transitioned from being a
niche crypto-AI project to gaining widespread recognition within
the open-source AI community. Notably, a significant network
upgrade proposal called Dynamic TAO has been pivotal in this surge.
Bittensor operates as an ecosystem of specialized networks, known
as subnets, each dedicated to a specific machine learning use case
or resource provision. These subnets offer diverse services,
including conversational AI platforms similar to ChatGPT,
prediction tools for financial markets, pre-trained and fine-tuned
models, synthetic data, and data storage solutions. The Root
Network, specifically subnet 0, functions as Bittensor’s governing
body, where Root validators vote on the allocation of emissions to
the various subnets. However, two key issues have been identified
with the current system: Concentration of Influence Over Emissions:
The top five Root validators control over 60% of the token supply.
Scalability Issues: The manual process of setting emissions for
each subnet becomes increasingly impractical as the number of
subnets grows. Related Reading: Bitcoin, Solana Take Center Stage
In $721 Million In Institutional Inflows The foundation has
proposed a network upgrade known as Dynamic TAO to address these
issues. This upgrade aims to replace the Root Network with an
automated, market-driven mechanism for emission distribution,
shifting away from a subjective, manual process dominated by a few
validators. Furthermore, according to the researcher, under Dynamic
TAO, each subnet would have its unique token and native liquidity
pool paired with TAO. Emissions would be allocated based on
the relative market price of these subnet tokens. Subnets that
generate the most value would see their subnet tokens in high
demand from validators, signaling the protocol to allocate more
emissions to them. Bullish Demand For TAO To prevent potential
dilution of TAO, subnet tokens are designed to be non-transferable
outside the Bittensor system. The conversion between subnet
tokens and TAO would occur through the protocol’s intrinsic
liquidity pools (LP), treated as a staking activity. According to
Kassab, acquiring subnet tokens would thus require purchasing and
staking TAO within a subnet pool for validation or speculation.
This design is expected to create bullish demand for TAO, as the
need for subnet tokens would drive an increased demand for
TAO. For instance, the research shows that if subnets achieve
a collective valuation of $1 billion, assuming a 10% weekly trading
volume relative to their market cap, the demand for TAO could
witness a 2 – 4x surge, driven by the requirement to purchase TAO
before acquiring subnet tokens. Ultimately, Kassab believes that
the Dynamic TAO proposal sets the stage for an “AI Casino” within
Bittensor, a development with positive implications for the
platform and the token’s price growth. Related Reading: Whale
Rapidly Accumulating Chainlink: What’s Going On With LINK? Overall,
Bittensor’s solutions and proposals demonstrate an intriguing
approach to drive growth within its ecosystem. These initiatives
aim to attract investors, stakers, and developers focusing on
artificial intelligence, all while leveraging the potential of its
native token, TAO. At the time of writing, the TAO token is trading
at $481, reflecting an increase of over 12% within 24 hours.
Furthermore, TAO has demonstrated a sustained upward trend over
significant time frames, with an 8% growth in the past 7 days and
an 85% growth over the past 14 days. Moving forward, it remains to
be seen how the protocol will continue to attract new investors and
developers, potentially driving TAO’s price beyond its current
all-time high of $521, achieved on February 6. Featured image
from Shutterstock, chart from TradingView.com
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