Miner Overview
High Level Idea
Our miners act like traders. To score well and receive incentive, they place orders on our system against different trade pairs. The magnitude of each order is determined by its leverage, which can be thought of as the percentage of the portfolio used for the transaction. An order with a leverage of 1.0x indicates that the miner is betting against their entire portfolio value.
The first time a miner places an order on a trade pair, they will open a position against it. The leverage and directionality of this position determines the miner’s expectation of the trade pair’s future movement. As long as this position is open, the miner is communicating an expectation of continued trade pair movement in this direction. There are two types of positions: LONG and SHORT.
A long position is a bet that the trade pair will increase, while a short position is a bet that the trade pair will decrease. Even if the overall position is LONG, a miner can submit a number of orders within this position to manage their risk exposure by adjusting the leverage. SHORT orders on a long position will reduce the overall leverage of the position, reducing the miner’s exposure to the trade pair. LONG orders on a long position will increase the overall leverage of the position, increasing the miner’s exposure to the trade pair.
Basic Rules
- Your miner must register on the Bittensor network to participate.
- There is a minimal registration fee <1 TAO on mainnet.
- There is an immunity period of 4 hours. Eliminated miners do not benefit from being in the immunity period.
- Your miner will start in the challenge period upon entry. Miners must demonstrate consistent performance within 90 days to pass the challenge period. During this period, they will receive a small amount of TAO that will help them avoid getting deregistered. The minimum requirements to pass the challenge period:
- Have at least 61 full days of trading
- Don’t exceed 10% max drawdown
- Score at or above the 15th miner in each asset class in main competition. The details may be found here.
- Positions are uni-directional. Meaning, if a position starts LONG (the first order it receives is LONG), it can’t flip SHORT. If you try and have it flip SHORT (using more leverage SHORT than exists LONG) it will close out the position. You’ll then need to open a second position which is SHORT with the difference.
- Position leverage is bound per trade pair. If an order would cause the position’s leverage to exceed the upper boundary, the position leverage will be clamped. Minimum order leverage is 0.001. Crypto positional leverage limit is [0.01, 0.5]. Forex positional leverage limit is [0.1, 5].
- Leverage is capped at 10 across all open positions in a miner’s portfolio. Crypto position leverages are scaled by 10x when contributing to the leverage cap. View for more details and examples.
- You can take profit on an open position using LONG and SHORT. Say you have an open LONG position with .5x leverage and you want to reduce it to a .25x leverage position to start taking profit on it. You would send in a SHORT signal of size .25x leverage to reduce the size of the position. LONG and SHORT signals can be thought of working in opposite directions in this way.
- Miners that have passed challenge period will be eliminated for a drawdown that exceeds 10%.
- Miners in main competition who fall below the top 15 in each asset class will be observed under a probation period.
- Miners in probation period have 30 days from time of demotion to be promoted back into main competition.
- If they fail to do so within this window, they will be eliminated.
- A miner can have a maximum of 1 open position per trade pair. No limit on the number of closed positions.
- A miner’s order will be ignored if placing a trade outside of market hours.
- A miner’s order will be ignored if they are rate limited (maliciously sending too many requests)
- There is a 10-second cooldown period between orders of the same trade pair, during which the miner cannot place another order.
- CRITICAL: Never reuse hotkeys that have been previously eliminated or deregistered. Once a hotkey is eliminated or deregistered, it is permanently blacklisted by the network. Validators internally track all departed hotkeys (both eliminated miners and voluntary deregistrations) and will reject orders from re-registered hotkeys. Each registration must use a completely new, unused hotkey. This policy ensures network integrity and prevents circumventing elimination penalties.
Scoring Categories
Our incentive is split into a number of subcategories, each of which is competitive using the same rules of logic as seen above. This helps to balance the spread of information which is generated on our network, without being too prescriptive in terms of what it means to score well within a specific subtopic. The incentive is split evenly between asset classes, with subcategories as follows:
Crypto (50% total emission)
| Subcategory | Weight | Percentage | Effective Total |
|---|---|---|---|
| MAJORS | 0.8 | 80% | 40% |
| ALTS | 0.2 | 20% | 10% |
Forex (50% total emission)
Based on margin requirements on brokerage accounts
| Subcategory | Weight | Percentage | Effective Total |
|---|---|---|---|
| G1 | 0.2927 | 29.27% | 14.64% |
| G2 | 0.1463 | 14.63% | 7.32% |
| G3 | 0.2073 | 20.73% | 10.37% |
| G4 | 0.0976 | 9.76% | 4.88% |
| G5 | 0.2561 | 25.61% | 12.81% |
To achieve maximum reward as a miner, you will need to be competitive in all asset categories. You may find more information about this in the following proposal: P23.
Scoring Details
Debt-Based Scoring System (Active December 2025+)
PTN uses a debt-based scoring system that pays miners proportionally based on their previous month’s performance. The system tracks three key components for each miner:
- Emissions Ledger: Records ALPHA/TAO/USD tokens earned in 12-hour checkpoints
- Performance Ledger: Tracks PnL, fees, drawdown, and portfolio returns
- Penalty Ledger: Applies multipliers for drawdown, risk profile, min collateral, and risk-adjusted performance
These components are combined into a Debt Ledger that calculates:
- Needed Payout: Previous month’s PnL scaled by penalties (in USD)
- Actual Payout: Current month’s emissions already received (in USD)
- Remaining Payout: Debt still owed to the miner (in USD)
Weights are distributed proportionally to remaining payouts, targeting completion by day 25 of each month. The system uses an aggressive payout strategy that front-loads emissions early in the month while respecting the hard deadline.
Average Daily PnL has the highest weight (90%) and incentivizes miners to maintain high returns while increasing account sizes. The remaining scoring metrics (Calmar, Sharpe, Omega, Sortino, Statistical Confidence) each contribute 2% to ensure well-rounded performance evaluation.
We calculate daily returns for all positions and the entire portfolio, spanning from 12:00 AM UTC to 12:00 AM UTC the following day. However, if a trading day is still ongoing, we still monitor real-time performance and risks.
This daily calculation and evaluation framework closely aligns with real-world financial practices, enabling accurate, consistent, and meaningful performance measurement and comparison across strategies. This remains effective even for strategies trading different asset classes at different trading frequencies. This approach can also enhance the precision of volatility measurement for strategies.
Annualization is used for the Sharpe ratio, Sortino ratio, and risk adjusted return with either volatility or returns being annualized to better evaluate the long-term value of strategies and standardize our metrics. Volatility is the standard deviation of returns and is a key factor in the Sharpe and Sortino calculations.
In determining the correct annualization factor, we weigh more recent trading days slightly higher than older trading days. This should encourage miners to regularly update their strategies and adapt to changing market conditions, continually providing the network with the most relevant signals. The most recent 10 days account for 25% of the total score, the most recent 30 days account for 50%, and the most recent 70 days account for 75%, with a pattern that tapers exponentially over time. The average daily PnL metric has a more aggressive recency weighting to encourage frequent trading activity. The first 10 days has 40% of the total score, the first 30 days account for 70%, and the first 70 days account for 87% also with weight that tapers exponentially over time.
Additionally, normalization with annual risk-free rate of T-bills further standardizes our metrics and allows us to measure miner performance on a more consistent basis.
Scoring Metrics
We use Average Daily PnL and five risk-adjusted scoring metrics to evaluate miners based on daily returns: Calmar Ratio, Sharpe Ratio, Omega Ratio, Sortino Ratio, and Statistical Confidence (T-Statistic).
The miner risk used in the risk adjusted returns is the miner’s maximum portfolio drawdown.
Average Daily PnL will look at the average USD change in portfolio value for full trading days. The PnL values are based on the account sizes of miners which are calculated from deposited collateral.
Calmar Ratio will look at daily returns in the prior 120 days and is normalized by the max drawdown.
The sharpe ratio will look at the annualized excess return, returns normalized with the risk-free rate, divided by the annualized volatility which is the standard deviation of the returns. To avoid gaming on the bottom, a minimum value of 1% is used for the volatility.
The omega ratio is a measure of the winning days versus the losing days. The numerator is the sum of the positive daily log returns while the denominator is the product of the negative daily log returns. It serves as a useful proxy for the risk to reward ratio the miner is willing to take with each day. Like the Sharpe ratio, we will use a minimum value of 1% for the denominator.
The sortino ratio is similar to the Sharpe ratio except that the denominator, the annualized volatility, is calculated using only negative daily returns (i.e., losing days).
Statistical Confidence uses a t-statistic to measure how similar the daily distribution of returns is to a normal distribution with zero mean. Low similarity means higher confidence that a miner’s strategy is statistically different from a random distribution.
| Metric | Scoring Weight |
|---|---|
| Average Daily PnL | 90% |
| Calmar Ratio | 2% |
| Sharpe Ratio | 2% |
| Omega Ratio | 2% |
| Sortino Ratio | 2% |
| Statistical Confidence | 2% |
Scoring Penalties
There are two primary penalties in place for each miner:
- Max Drawdown: PTN eliminates miners who exceed 10% max drawdown.
- Risk-Profiling: Miners are penalized for having positions that may create undue risk for copy traders.
To avoid the impact of a risk profiling penalty, we recommend that you avoid doing the following:
- Step three or more times into a position or increasing the max leverage twice on a losing position.
- Use more than 50% of the available leverage on the trade pair or increasing leverage by 150% relative to the entry leverage of the position
- Having uneven time intervals between orders, which would indicate they are not TWAP-scheduled orders.
Full implementation details may be found here.
The Max Drawdown penalty and Risk Profiling penalty help us detect the absolute and relative risks of a miner’s trading strategy in real time.
Fees and Transaction Costs
We want to simulate real costs of trading for our miners, to make signals from PTN more valuable outside our platform. To do this, we have incorporated three primary costs: Cost of Carry, Slippage, and Spread Fee.
Cost of carry is reflective of real exchanges, and how they manage the cost of holding a position overnight. This rate changes depending on the asset class, the logic of which may be found in our proposal 4.
Slippage costs are modeled to estimate the difference between a trade’s expected price (typically the last traded price or mid-price between the best bid and ask) and its actual execution price. This cost is higher for larger orders, as well as for assets with lower liquidity and higher volatility. Read more in proposal 16.
Spread fee is applied to crypto pairs only and is calculated as 0.1% multiplied by the leverage of each order. This fee simulates a transaction cost that a normal exchange would add.
Implementation Details
Carry Fees:
| Market | Fee Period | Times | Rates Applied | Triple Wednesday |
|---|---|---|---|---|
| Forex | 24h | 21:00 UTC | Mon-Fri | ✓ |
| Crypto | 8h | 04:00, 12:00, 20:00 UTC | Daily (Mon-Sun) |
The magnitude of the carry fees will reflect the following distribution:
| Market | Base Rate (Annual) | Daily Rate Calculation |
|---|---|---|
| Forex | 3% | 0.008% * Max Seen Leverage |
| Crypto | 10.95% | 0.03% * Max Seen Leverage |
Spread Fee (Transaction Fee):
| Market | Spread Fee Rate | Applied To |
|---|---|---|
| Forex | None | N/A |
| Crypto | 0.1% * Leverage | Each order placed |
Leverage Limits
We also set limits on leverage usage, to ensure that the network has a level of risk protection and mitigation of naive strategies. The positional leverage limits are as follows:
| Market | Leverage Limit |
|---|---|
| Forex | 0.1x - 5x |
| Crypto | 0.01x - 0.5x |
We also implement a portfolio level leverage limit, which is the sum of all the leverages from each open position. This limit is set at 10x a “typical” position, where a typical position would be 1x leverage for forex and 0.1x leverage for crypto. You can therefore open 10 forex positions at 1x leverage each, 5 forex positions at 2x leverage each, 5 forex positions at 1x and 5 crypto positions at 0.1x, etc.
Incentive Distribution
Debt-Based Weight Calculation (Active December 2025+)
Starting in December 2025, PTN uses a debt-based scoring algorithm to calculate miner weights:
- Previous Month Performance: Calculate each miner’s needed payout from previous month (PnL × penalties in USD)
- Current Month Emissions: Sum emissions already received in current month (in USD)
- Remaining Debt: Calculate remaining payout = needed - actual (in USD)
- Weight Assignment: Weights are proportional to remaining debt, targeting payout completion by day 25
- Dynamic Dust Weights: All miners receive minimum weights based on their challenge period status:
- MAINCOMP: 3× dust floor (scaled up to +1 dust based on 30-day performance)
- PROBATION: 2× dust floor (scaled up to +1 dust based on 30-day performance)
- CHALLENGE/PLAGIARISM: 1× dust floor (scaled up to +1 dust based on 30-day performance)
- UNKNOWN: 0× dust (no weight)
- Burn Address: Excess weight (when sum < 1.0) goes to burn address (UID 229 mainnet / UID 5 testnet)
Aggressive Payout Strategy:
- Early month (days 1-20): Target 4-day completion to front-load emissions
- Late month (days 21-24): Target actual remaining days until deadline
- Day 25: Final payout deadline
This system ensures miners are compensated fairly based on their performance while maintaining network security through minimum weights and preventing weight concentration through the burn mechanism.
Holidays
There are several enforced trading holidays where signals will not be processed. These include:
| Holiday | Date | Asset |
|---|---|---|
| New Years | Jan 1 | Forex |
| Good Friday | Apr 18, 2025 | Forex |
| Christmas Day | Dec 25 | Forex |
| Boxing Day | Dec 26 | Forex |
Where a holiday falls on a weekend, it is observed on the nearest working day.