Updates to Scoring and Miner Buckets

A New Path Forward

In P20, we proposed an emissions burn in order to align miner payouts with performance and transition to a fully performance aligned reward structure. We wanted to decrease the burn over time as collateral grows and encourage the development of high performing miners who are able to consistently outperform and drive user value. The community feedback to this proposal was received, and we have decided not to implement a burn moving forward.

Instead, we propose a new solution combining updates to the scoring mechanisms, reg fee, and the introduction of a third bucket of miners beyond those in challenge period and the main competition. Together these changes will place added emphasis on a miner’s consistent performance and increase the competitiveness required to stay in the main competition and continue accruing incentives.

Emphasis on Recent Performance

Our goal is for top miners to continue to demonstrate sustained performance in the main competition after they have been promoted from challenge period. Under the current scoring metrics, a miner who has historically performed well and achieved a high rank is able to lower their frequency of trading and remain highly ranked. It is therefore essential to increase the relevance of recent performance and incentivize continued performance at a high level.

We will slightly decrease the decay rate for miner returns weighting over time from 0.08 to 0.075 and lower the floor for the oldest positions from a weight of 0.4 to 0.15. Using this new distribution (red), the most recent 30 days accounts for 50% of a miner’s scored returns, whereas the oldest 50 days accounts for 25% of their scored returns. The most recent 10 days accounts for 25% of a miner’s scored returns, putting greater emphasis on recent performance. Under this new system, a miner will have to demonstrate a level of recent performance to remain highly ranked.

Weight Distribution

We will also increase the temperature of the softmax function from 0.125 to 0.25. The softmax function amplifies score differences between miners, distributing a greater proportion of rewards to higher ranked miners. Increasing the temperature of the softmax function flattens the distribution, such that differences in returns will have a more proportional effect.

Increased Look Back Window and Length of Challenge Period

The current look back window for scoring is 90 days, with a minimum challenge period length of 60 days. The goal of these look back windows is to assess the performance of a miner with a reasonable degree of statistical confidence. We will increase the length of both of these to 120 days. The increase to the minimum length of challenge period will be performed incrementally, increasing each window by 7 days every 14 days, beginning on June 6. This will lessen the burden on miners currently in or near completion in challenge period. Increasing the length of these windows will allow us to more accurately assess miners, as well as protect the quality of the network by making it exponentially harder for statistically random strategies to succeed. The maximum length of time in challenge period will also be increased from 90 to 150 days immediately.

Increased Registration Fee

An increase to the cost of registration allows us to increase the capital base of each miner and extend the capacity of the network. The current registration fee is 1.5 Tao, which will be immediately increased to 2.5 Tao. Accordingly, the capital base for each miner will be increased from $100k to $150k. This increase in capacity further aligns emissions payouts with miner performance, allowing us to forgo a burn.

Challenge Period Promotion Updates

Our goal is for the main competition of miners who have been promoted from challenge period to represent the best strategies and traders. The current criteria for promotion from challenge period require that a miner exceed the 75th percentile in scoring of all main competition miners. This sets a high bar but also ensures that miners who are near the end of challenge period are oftentimes better than many of the miners in the main competition. A challenge period miner who finds themselves in the 70th percentile may be eliminated at the end of 90 days but is still better than many main competition miners.

We will address this discrepancy by increasing the turnover between miners in challenge period and the main competition. The threshold for promotion will be lowered significantly, from the 75th percentile to the 0th percentile. If a miner in challenge period is better than the worst miner in the main competition during their eligible promotion window, they will be promoted to the main competition. This will ensure that any miner who is able to perform better than another miner in the main competition will be promoted and will receive emissions.

New Main Competition Demotion

However, we will also be limiting the size of the pool of miners eligible for incentives in the main competition. We have found that many miners continue to collect incentives while providing very little return by avoiding the 10% max drawdown elimination criteria. Given the current number of roughly 60 active miners in the main competition, the 75th percentile indicates that a challenge period miner must enter around rank 15. We will limit the number of miners in the main competition to 25. Any miner below the 25th rank in the main competition will face demotion to a probationary bucket.

When a new miner is promoted from challenge period, the bottom ranked miner in the main competition will be demoted. This will lead to turnover in the main competition but ensures that each miner continues to be performant. Inside the probationary bucket, miners will have a 30 day window, similar to challenge period, to demonstrate performance and regain main competition status by performing better than the worst main competition miner. If a probationary miner fails to demonstrate performance during this 30 day window, they are eliminated. Miners in the probationary bucket will receive emissions greater than but similar to those in challenge period.

Summary of Changes

Altogether, these changes will increase the level of competitiveness amongst miners and ensure that miners receiving the top emissions payouts must continue to demonstrate recent performance. The scoring and emissions distributions will be updated to provide greater rewards to those miners in the top 25, which more proportionally matches returns. Simpler criteria for challenge period promotion and added main competition demotion rules will make it easier for miners to demonstrate their performance and receive incentives.

These changes will be implemented in phases, with scoring and registration updates going into effect on Friday, May 30. Challenge period promotion and main competition demotion rules will be implemented in the coming weeks.

Timeline and Change Log

Integration: May 30, 2025

Decreased scoring decay rate from 0.08 to 0.075 and decreased minimum scoring weight from 0.4 to 0.15.
Increased softmax from 0.125 to 0.25.
Increased look back window from 90 to 120 days.
Increased registration cost from 1.5 Tao to 2.5 Tao.

Integration: June 6, 2025

Increased minimum challenge period length from 60 to 120 days. Increasing by 7 days every 14 days.
Increased maximum challenge period length from 90 to 150 days.

Integration: June 13, 2025

Decreased challenge period promotion criteria from the 75th percentile to the 0th percentile.
Decreased number of miners in main competition to 25 miners.
New third bucket for demoted main competition miners.
New rules for main competition demotion and elimination.