The dTAO upgrade for $TAO is in 3 days. We have seen a very positive price action, already recovering as one of the few coins on #Binance the entire dip.

I originally loaded up at 280.

So what is dTAO and why is TAO going up?

dTAO is a protocol upgrade where each Bittensor subnet receives its own token.

A liquidity pool will be created between the subnet tokens and TAO to determine the value of the subnet tokens.

The value of subnet tokens is now tied directly to the performance of each subnet, introducing more risk and reward, as these tokens may fluctuate independently of the overall TAO token.

Reasons for dTAO:
Decentralization of Subnet Ranking: The current ranking by validators is inefficient. dTAO introduces an open market mechanism for valuing subnets based on demand and usage.
Scalability of Validators: The current system is limited by the number of top validators. Requiring validators to hold subnet tokens will create a free-market approach, with validators choosing which subnets to support based on market dynamics.

Impact on Stakeholders:
Miners: They will now receive emissions in subnet tokens, which introduces the strategic decision of selling or holding tokens, balancing immediate financial needs against potential long-term value.
Validators: Validators must hold subnet tokens to validate specific subnets, introducing more risk as they decide which subnets to validate, with potentially higher rewards or lower yields based on the subnet they choose.
Stakers: Like validators, stakers now actively choose where to delegate their tokens, balancing risk and reward based on subnet selection.
Owners: Subnet owners receive subnet tokens, and their success depends on creating external revenue streams and driving demand for their tokens to avoid devaluation.

Ecosystem Impact:
The shift to dTAO makes each subnet’s token value dependent on its success, creating more volatility and risk but also the potential for higher rewards.
The new structure encourages long-term strategic thinking and innovation, with projects demonstrating sustained value and real-world utility having an advantage.

Practical Implications:
The ecosystem will see volatility as participants adjust to the new incentive structures.
The competition between subnets will intensify, and only the strongest subnets that attract consistent validators, miners, and stakers will thrive.
Speculation and reputation will play major roles in subnet success.

Overall, the introduction of dTAO shifts the Bittensor ecosystem to a more dynamic, market-driven model where subnet success is determined by performance, innovation, and market adoption, leading to greater competition and potential for growth.