SN8 Litepaper

This is a full rundown on SN8 and its alphanomics. We’ve put together a TLDR for your convenience as well.

SN8 Litepaper – TLDR

What is PTN?

SN8 (PTN) is a decentralized prop firm network built on Bittensor.

Evaluates traders in a simulated, rule-based environment
Uses the top traders’ signals to power live strategies inside Glitch
Routes real trading profits back into buying alpha, its native token

The alpha token is the access key. It unlocks trading capacity, powers miner participation, and captures the economic upside of the whole system.

1. Problem: Prop Firms Are Huge, Predatory, and Misaligned

Traditional prop firms:

Make most of their money from challenge fees, not trader profits
Enforce unrealistic rules and restrictive drawdowns
Run on simulated accounts with opaque, off-chain tracking
Delay or deny payouts, with no verifiable audit trail

Yet the economics are incredible:

Industry size: $5B+ in revenue per year (reports up to $10-20B in revenue)
Top firms like FTMO and MyForexFunds generate $200M annually
90–97 percent of challenge fees are pure profit
93–95 percent of traders fail

High demand, high margins, low trust. Perfect for disruption.

2. PTN’s Core Idea

Flip prop firms from “we profit when you lose” to “we profit when you win.”

PTN:

Runs a decentralized trading simulation
Scores traders on risk-adjusted performance (not raw PnL)
Promotes the best traders into Glitch network models
Uses live trading profits to buy alpha token and grow the treasury

Incentives line up:

Traders want to win
Entities want to scale high quality traders
The network wants stable, risk adjusted performance
Alpha token holders benefit from protocol cash flows

3. How PTN Works (High Level)

Traders (miners) deposit alpha tokens to unlock simulated AUM
Validators act as pseudo-exchanges, enforcing:
- 10 percent max drawdown
- leverage and sizing limits
- no martingale behavior
Traders are ranked by risk-adjusted metrics and only the most stable reach payout status
Top traders’ signals feed Glitch network models, which trade real markets

There are two ways to participate:

Individual miners
- Deposit alpha tokens
- Trade in the simulation
- Compete for a top 25 spot in their asset class over 60–90 days
- If they pass and maintain performance, they receive monthly token emissions based on risk-adjusted profits
- If they fail or later fall and do not recover, their alpha token deposit is burned
Entity miners
- Pay a fee of 2,500 in alpha tokens to register as a decentralized prop firm
- Get 10× capacity per alpha
  - Individuals: 1 alpha → $500 capacity
  - Entities: 1 alpha → $5,000 capacity
- Onboard external traders as sub-accounts (up to $100K each)
- Sub-accounts pass instantly if they make 5% profit with ≤ 10% drawdown within 90 days
- Entities earn a margin between what they charge users and what the network charges them

Entities become out-of-the-box prop firms built on PTN.

4. The Role of Alpha

Alpha token is:

Collateral for individuals
Capacity key for entities
The unit of access to PTN’s simulated AUM
The asset bought by the treasury using real trading profits

Capacity is capped to protect stability:

Individuals: up to $500K per trader today (with $2.5M prepared for phased release)
Sub-accounts: up to $100K per trader
Entities scale by adding sub-accounts, not by giving one trader unlimited size

5. How the Token Economy Works

Single outflow

Emissions go only to traders who generate positive risk-adjusted profits (RAP)
Any token emission not backed by RAP is burned
We assume traders sell all received emissions for conservative modeling

Major inflows

Individual miner deposits
- Every trader must deposit alpha tokens to get capacity
- Failed traders → deposit burned → supply reduced
Entity miner capacity usage
- Entities must acquire alpha to expand capacity
- As they grow from hundreds to tens of thousands of traders, alpha demand scales fast
Taoshi’s own entity miner margins
- Our flagship decentralized prop firm
- Margins from onboarding and sub-account activity convert to alpha buybacks
Treasury’s profits using Glitch network models
- Glitch aggregates top trader signals
- Network models are expected to be 10–20% more capital efficient than direct-copy trading
- USD profits go into buying alpha token, growing the treasury, and offsetting trader sell pressure

Burns and supply compression

Alpha token is burned via:

failed individual miner deposits
entity registration failures
unclaimed emissions

This compresses supply while inflows, buybacks, and demand expand.

6. Why This Is a Net-Positive System

SN8 is designed so that:

Inflows from fees, deposits, margins, and trading profits are greater than outflows from trader token emissions and burns permanently reduce circulating supply.

You get:

Structural token buy pressure from real revenue
Structural token supply reduction from burns
Structural demand growth from entities onboarding more traders

Alpha shifts from being speculative to being backed by a high-margin, cash-flow-positive engine.

7. Taoshi’s Flagship Miner and Future Expansion

Taoshi will:

Launch its own entity miner as the flagship decentralized prop firm on PTN
Use USD-based onboarding so non-crypto users can participate
Convert margins into alpha token purchases
Prove PTN’s scalability and economics in public

Longer term horizon, PTN expands beyond prop firms into:

funded accounts for DEXs
automated sub-account creation
stablecoin payout rails
a funding layer for onchain markets

This expands SN8’s TAM from an already large market generating significant revenue to the $100B+ onchain trading ecosystem.

8. One-Sentence Summary

SN8 turns the prop firm model into a decentralized, transparent, cash-flow engine where traders win, the network earns, and the more alpha is bought and burned, the greater its value.

SN8 Litepaper

1. Background: The Retail Prop Firm Industry

Over the last five years, the retail prop firm industry has exploded into a multi-billion dollar sector. Millions of retail traders—driven by short-form content, aggressive marketing, and the promise of “funded accounts”—flock to prop firms that advertise access to large capital allocations in exchange for passing a trading challenge.

The model is marketed as meritocratic.

In reality, it is built on trader failure.

The overwhelming majority of revenue for traditional prop firms comes from challenge fees, not trader profits. These challenges are intentionally structured so that most traders do not pass, allowing firms to run a highly profitable “pay-to-try” model.

Common practices

High failure rates due to unrealistic rules and restrictive drawdowns
Artificial stop-loss hunting and widened spreads during volatile periods
Delayed, partial, or denied payouts without transparency
Incentive structures that encourage reckless, high-variance behavior
Payouts from simulated accounts, not real capital
- No verifiable audit trail for trader performance

Despite the misalignment, the economics are extremely attractive.

The industry generates $5B+ in revenue annually with reports up to $10B - $20B, with FTMO reporting $200M+ in yearly revenue. The retail prop space is the fastest growing segment within the total prop firm industry.

The combination of:

massive global demand
extremely high margins
zero transparency
poorly aligned incentives
no real capital allocation

creates a perfect landscape for disruption.

2. Why PTN Is a Disruptor

PTN transforms the traditional prop firm incentive model.

PTN evaluates traders in a decentralized, transparent simulation environment and routes the trading intelligence of the top performers into live, real-capital trading models inside Glitch. The better the traders perform:

the more accurate the signals
the more profitable the network models
the more alpha the treasury buys
the more value flows back into the system

PTN creates a closed-loop, incentive-aligned marketplace where trader performance fuels protocol performance.

PTN is built on five principles:

Decentralization — no centralized evaluator can manipulate results
Open-source logic — rules, scoring, and challenge flow are fully inspectable
Onchain transparency — deposits, burns, and payouts are verifiable
Permissionless access — anyone can attempt to qualify
Real trading — high-performing signals are turned into live strategies

PTN’s native alpha token becomes the scarce resource that unlocks access, trading capacity, and the entire ecosystem’s economic engine.

PTN transforms a historically predatory industry into a global, transparent, high-margin, performance-aligned protocol.

3. How PTN Works

PTN operates a decentralized trading simulation engine powered by bittensor. Traders (miners) interact with the network through a deterministic, rule-driven environment:

Validators receive real-time orders from miners
They enforce position and drawdown limits
They track real-time PnL and closed-trade performance
They score traders based on risk-adjusted metrics, not raw profits
They output transparent rankings per asset class

There is no human intervention, no opaque internal risk desk, and no manual manipulation.

High-performing traders feed their signals into Glitch network models, which execute real trades with real capital. This creates real revenue that cycles back into alpha demand.

Depositing alpha unlocks trading capacity and defines the degree to which a trader or entity can scale inside the system. Therefore, alpha is the access key.

With PTN:

The best traders win by having a fair place to trade with large AUM
Prop firms built on PTN win as they have large margins
The network wins, benefiting from winning traders and those who fail ensuring optimization of fund usage

Let’s dive into the details.

3.1 Mining

3.1.1 Two Participation Paths

PTN accommodates two archetypes:

Individual Miners — skilled traders proving themselves directly
Entity Miners — organizations onboarding fleets of traders

Both are crucial to network growth, but each follows a distinct flow.

3.1.2 Alpha and Trading Capacity

Before diving into each type its important to understand the significance of alpha in our network and it’s utility.

To participate, traders deposit alpha into an EVM smart contract, which assigns them a specific amount of simulated trading capacity (AUM).

This creates an onchain, verifiable bond between:

trader commitment
risk limits
trading power
long-term system value

Capacity Ratios

Individual Miners

1 alpha → $500 trading capacity
Entity Miners

1 alpha → $5,000 trading capacity

Why entities receive 10× the capacity

The multiplier is not a perk or reward but a structural requirement:

Entity miners must pay a 2,500 alpha registration fee to join.
Entity sub-accounts can access $100K maximum capacity, which fragments capital across many traders.
To run a viable prop-firm-scale operation, entities must allocate thousands to tens of thousands of traders over time at competitive rates.
A 10× ratio ensures entities have meaningful operational scale while retaining strict capital constraints (per sub-account and per entity).

Why alpha-backed capacity matters

It ensures:

Skin in the game: Only committed traders deposit alpha.
Direct economic linkage: Participation drives demand for alpha.
Supply reduction: Failed or eliminated traders lose deposits (burned).
Scalable rewards: Successful traders deposit more alpha to scale.
Entity growth: Entities accumulate alpha to expand AUM and sub-accounts.

Capacity Caps

To preserve stability and integrity:

Individual miners max out at $500K capacity today
Infrastructure for $2.5M per trader is built but will roll out progressively
Sub-accounts max at $100K with plans for automated scaling in Q1 2026
Entities scale horizontally, not vertically, through sub-account growth

SN8 alpha becomes the programmable “capital key,” ensuring controlled growth and predictable token demand.

3.1.3 Individual Miners

Individual miners deposit alpha, receive capacity, and begin trading under the network’s rules.

Challenge Period

Length: 60–90 days
Goal: finish in the top 25 of the asset class by risk-adjusted performance (RAP)
Scored entirely by decentralized validators

PTN’s challenge is strict but fair, with no hidden rules, no internal risk desk, and no manual overrides.

After Passing

A successful trader:

becomes payout eligible
can scale their capacity by depositing more alpha
contributes signals to Glitch network models
receives monthly payouts based on risk-adjusted closed PnL

Probation and Elimination

Falling out of the top 25 triggers 60-day probation
Recovery = continued participation
Failure = elimination + burned deposit

The system continuously selects for consistency, discipline, and long-term stability.

3.1.4 Entity-Based Miners

Entity miners are decentralized prop firms running on PTN’s infrastructure.

They do not need to build:

execution engines
risk systems
dashboards
challenge logic
onchain payouts
scoring frameworks
anti-gaming protection

PTN provides all of it. This provides them the ability to generate profit from margins, what they charge users vs. what the network charges them.

An Out-of-The-Box Prop Firm

Prop firm margins are significant. For context, Breakout charges $1,000 for a $100k account to trade crypto. FTMO charges $600 for a $100k account concentrated on commodities & FX.

The network charges a reduced rate ($5,000 capacity per alpha) to an entity miner, allowing them to make a margin for every onboarded trader.

Entity Life Cycle (Phase 1 in December)

5 initial slots
2,500 alpha fee to join
180-day immunity period to prove growth
After immunity: lowest AUM enters probation
180 days in last place → elimination + burned fee

This ensures entities compete on performance, not marketing.

Sub-Accounts

Sub-accounts are external traders onboarded by an entity miner.

They follow the same risk rules, but with an accelerated evaluation path:

Instant pass criteria (within 90 days):

5% profit
≤10% max drawdown

This allows entities to onboard traders at large scale without adding system-wide risk.

Capacity Allocation

Each sub-account can access $100K
Entities receive $5,000 capacity per alpha
500 sub-accounts supported at launch
Scaling to tens of thousands in the next 6 months

Entities become global distribution nodes for PTN.

3.2 Trading Rules and Risk Framework

As a decentralized prop firm, PTN enforces rules on traders to ensure proper risk mitigation. PTN’s rules are programmatic, transparent, and enforceable.

Key Rules:

10% maximum drawdown (hard cap)
Position and account leverage limits
Order sizing constraints
Left-tail risk suppression via sizing and penalties
Validator-enforced compliance

Violations lead to immediate rejection or elimination, and collection of deposited alpha.

This framework protects the network, preserves signal quality, and ensures that only high-quality traders influence network models.

3.3 Incentive Mechanism: Risk-Adjusted Profits

PTN’s incentive mechanism is rather straightforward. It does not reward gamblers. It rewards risk-adjusted profitability (RAP). At the beginning of every month, the network reviews the open & closed positions of every miner. Emissions are then allocated purely based on RAP from the previous month. Any emissions not justified by RAP are burned by the network.

The incentive framework ensures that:

High-quality traders earn more
Reckless traders eliminate themselves
Network models learn from disciplined strategies

Penalty Curves

Sigmoid-based penalties reduce payouts for:

oversized positions
high volatility
rapid equity swings
martingale / doubling behavior

It does this using a basket of metrics including: sharpe, sortino, omega, stat confidence, and calmar ratios.

This model ensures that traders who benefit the network the most receive the largest payouts.

4. Taoshi’s Own Miner Launch

Taoshi will operate its own entity miner, establishing the flagship decentralized prop firm of the bittensor ecosystem.

1. GTM Engine

Through a USD-based onboarding funnel, Taoshi brings large volumes of traders into PTN without requiring them to understand crypto.

This:

accelerates growth
validates the product
proves superiority over legacy firms

2. Margin Generator

Prop firm margins are significant as mentioned in 3.1.4, and Taoshi’s entity miner will initially convert these margins into alpha purchases.

3. Proof of PTN’s Strength

Running our own prop firm demonstrates:

PTN’s reliability
PTN’s transparency
PTN’s ability to scale real users
the integrity of the risk engine
increased revenue for the network

This positions Taoshi as a next-generation competitor to FTMO, Breakout, and MyForexFunds, offering transparency and decentralization they cannot match.

5. Alphanomics: The Economics Behind PTN

SN8’s alpha token is designed to be backed by a proven, cash-flow-positive business model, the proprietary trading firm industry.

The economic design of SN8 creates a system where:

inflows scale as traders scale
burns reduce supply
real trading profits buy alpha
emissions go to productive traders
demand continually increases over time

This results in a structurally net-positive flow environment where alpha becomes scarcer as the network grows.

5.1 Why Prop Firms Are the Perfect Cash-Flow Model

We mentioned in 3.1.4 some numbers for prop firms, but it’s important to understand the raw profitability of these models.

1. Prop firms are among the highest-margin businesses in fintech.

They have:

99% gross margins on their core product (simulated accounts)
extremely low operating costs
no capital at risk
recurring inflows from challenge fees
lower-than-expected payout obligations

Across major centralized prop firms:

2. Industry Economics Snapshot

90–97% of challenge fees are pure profit
93–95% of traders fail challenges
Payout ratios are typically < 7% of total revenue
Industry disclosures and public estimates suggest annual revenue for top firms exceeds $200M.
Operating margins often sit above 60–80%

Even with a flawed product and no real capital backing, the industry became a multi billion-dollar revenue sector.

5.2 SN8 Improves the Prop Firm Model on Every Level

SN8 inherits the industry’s strongest economic characteristics:

challenge-style deposits
fee-driven recurring revenue
scalable trader acquisition
extremely low operational overhead

But SN8 improves the model in four critical ways:

1. Decentralized

No staffing, no compliance teams, no internal risk desk, no customer support overhead.

2. Transparent

Rules are open-source and cannot be manipulated unlike centralized firms.

3. Onchain

Deposits, burns, and payouts are verifiable.

4. Product Superiority

SN8 actually trades the intelligence it collects, turning trader success into protocol revenue, not a liability.

5.3 The Four Major Inflows Driving Alpha Demand

SN8 has four independent revenue streams, all of which convert directly into alpha buy pressure.

1. Individual Miner Deposits (Alpha Collateral)

Every trader must deposit alpha to unlock capacity.

Failed traders forfeit deposits → burned → reduces supply.

As the number of traders increases, demand for alpha increases linearly.

2. Entity Miner Capacity Fees (Scaling Engine)

Entity miners pay in alpha to access capacity.

This fee is recurring as entities grow:

more sub-accounts
more traders
more capacity needed

As entities scale from 500 → 10,000 → 100,000 traders, alpha demand scales nonlinearly.

3. Taoshi’s Own Prop Firm Margins

Taoshi will operate a flagship entity miner.

Margins from:

onboarding fees
sub-account challenge fees
recurring capacity usage

…are converted into open market alpha buybacks.

This replicates the economics of FTMO/MFF —

but instead of enriching insiders, SN8 routes value into the token.

4. Treasury Network Model Profits (Real USD Revenue)

Glitch aggregates signals from top miners and executes them in real markets.

Network models can exhibit:

lower volatility
higher sharpe
higher risk-adjusted return
10–20% capital efficiency improvement vs direct-copy trading

USD profits generated by Taoshi’s treasury leveraging the network models flow into:

→ alpha purchases on the open market

→ increased treasury size

→ offsetting trader emission sell pressure from top participants

This creates sustained, recurring buy pressure backed by real trading revenue.

5.4 The Single Outflow: Trader Emissions

Alpha emissions flow only to miners who produce risk-adjusted profit.

This means:

emissions are tied to real performance
unproductive miners get nothing
the most valuable traders receive emissions
emissions produce real economic output

Burn logic

All unclaimed emissions are burned
If miners earn less RAP than the month’s emission allotment, the difference is burned
This reduces supply in a predictable manner

Emissions become a performance incentive, not a dilution vector.

We assume miners sell their emissions for conservative modeling.

5.5 Structural Burns: Supply Reduction Over Time

Alpha supply decreases through:

failed individual miner deposits
entity registration fees
unclaimed emissions

These burns remove tokens from circulation permanently.

Burns = supply compression

Inflows = demand expansion

Combined → structural price pressure upward.

5.6 Net Flows: Why SN8 Is a Net-Positive Economic System

When you model SN8 as a full economic machine:

Inflows

individual deposits (increasing linearly)
entity miner fees (increasing nonlinearly as they onboard more traders)
Taoshi entity margins
Treasury traded profits

Outflows

emissions (paid only for real RAP)

Supply Reducing Events

deposit burns
entity fee burns
unclaimed emissions burns

Structural Buy Pressure

treasury converts USD profits → alpha
entity margins → alpha
Treasury trading profits → alpha

Inflows > Outflows + Supply Compression

SN8 is built to achieve:

higher inflows as traders scale
lower outflows as traders self-eliminate
structural buy pressure from revenue
compounding demand from entities
supply reduction through burns
treasury reinforcement from real market profits

5.7 Final Thoughts, Why SN8 Is a Game Changer

SN8 tokenomics combine:

1. Prop Firm Margins

One of the most profitable business models in fintech.

2. DeFi Liquidity Dynamics

Tokenized demand, onchain transparency, deterministic cost structures.

3. Real Trading Revenue

Network models powered by aggregated miner intelligence.

4. Recurring Buy Pressure

Treasury uses real profits to buy alpha monthly.

5. Supply Reduction

Burns permanently remove alpha from circulation.

6. Exponential Scaling

Entity miners can onboard tens of thousands of traders, each requiring alpha.

7. A Better Product Offering

Traders prefer PTN because:

transparent rules
onchain, trackable payouts
no predatory practices
real upside

8. A Larger TAM

PTN goes beyond prop firms with future offerings, addressing a missing market for funded accounts, DEXs.

→ automated sub-account creation

→ conversion to payouts in stables

→ permissionless trading infrastructure

→ the “funding layer” of onchain markets

PTN is built to be a cash flow engine.

It captures:

the profitability of prop firms
the transparency of decentralization
the scalability of crypto
the intelligence of traders
the yield of live models
the network effects of entities

And turns all of it into alpha demand, alpha buybacks, and alpha scarcity.

The economic architecture is built for:

self-reinforcement
compounding demand
declining supply
and long-term structural appreciation

SN8 is one of the rare systems where:

token value is directly proportional to system performance and trader success, not speculation.

5.8 The Economic Flywheel

flowchart TD

    A[1. Traders deposit alpha] --> B[2. Failed traders burn alpha]
    B --> C[3. Entity miners pay alpha fees]
    C --> D[4. Network models generate USD profits]
    D --> E[5. Treasury buys alpha]
    E --> F[6. Alpha emissions flow to top traders]
    F --> G[7. Treasury offsets sell pressure]
    G --> H[8. Trader count scales exponentially]
    H --> I[9. More sub-accounts → more fees → more demand]
    I --> J[10. Alpha becomes increasingly scarce]

    J --> A