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Taoshi Documentation

Introducing Collateral

As our network continues to grow, it’s critical that we increase the capacity of the network as well as align capital access with responsibility and long-term commitment. To that end, we are introducing a collateral mechanism that governs how much capital each miner can control, tying capital allocation to deposited Theta. In order to buffer against market volatility, the value of Theta is determined through a tokenomics pricing model. Initially, the capital equivalent value of Theta will be priced at $175 and updated quarterly based on tokenomic factors. The rollout of collateral will occur over two major phases: V1 and V2, with deployments scheduled for July and August.

The Problem: Capacity, Accountability, and Capital Risk

Our current capital model offers all miners equal access to simulated capital regardless of historical performance, risk profile, or level of commitment. While inclusive, this approach makes it harder to scale the capacity of the network and increase the capital managed. Miners with minimal investment can access significant capital, potentially contributing to unsustainable trading behavior. Additionally, without meaningful constraints, it’s difficult to enforce capital discipline or signal seriousness. A collateral model addresses these challenges by requiring miners to “put skin in the game” to access capital and build track records. The collateral system aligns incentives and introduces clear accountability into the network. By requiring a collateral deposit to unlock trading capital, we create a capital-efficient environment that scales with miner commitment and performance. This model enables long-term sustainability, filters out low-effort participants, and introduces a mechanism for capital scaling.

Theta Pricing and the Tokenomics Model

Theta will be used as the collateral deposit to access capital. The initial capital valuation per Theta will be fixed at $175, meaning that to control $250,000 of simulated capital, a miner must deposit 1,429 Theta.

Over time, the price per Theta will be evaluated dynamically using a tokenomics model, which takes into account factors including token supply, miner dynamics, and external inflows. By modeling liquidity-adjusted price changes and gradually increasing reward liquidity through an unlock schedule, the model estimates the evolving value and risk profile of collateral and aligns the system’s long-term sustainability and incentive structure.

V1: Transition Period

V1 of the collateral system will be a transition period focused on integration and optional participation from miners. During this phase, we will roll out the ptncli, a command-line tool designed to make it easy for miners to interact with, deposit, and withdraw collateral from the smart contracts. We highly encourage miners to familiarize themselves with the collateral system during this phase. This phase will be risk-free for miners; all miners will have access to 250K capital, regardless of their deposited collateral. All collateral deposited during this phase is able to be withdrawn, and miners who are eliminated will have their collateral returned. The amount of collateral able to be deposited is capped during this phase at 1429 Theta, equivalent to $250k capital.

During this phase, miners may also begin to select an asset class. This selection is permanent and cannot be changed later. If a miner wishes to trade multiple asset classes, they must manage those on multiple miners. This change will enable additional features for separation of scoring and incentives in a future update.

ptncli

We will be releasing a new command-line interface tool called ptncli to help manage subnet and collateral actions. Miners will be able to manage their collateral deposits using this tool.

  • ptncli deposit [amount]: Deposit Theta collateral
  • ptncli withdraw [amount]: Withdraw eligible collateral
  • ptncli status: View your current collateral balance
  • ptncli asset-class: Permanently choose your asset class

V2: Variable Capital and Collateral Requirements

With the introduction of V2, collateral requirements will be enforced for all new and existing miners, including those currently in challenge period or probation. A miner will be required to deposit enough theta in collateral to cover the size of their open positions. Additionally, the asset class selection is required and becomes a permanent constraint. Miners who do not fulfill either requirement will not be able to open new positions or increase the size of existing positions. The capacity of the network will also increase in V2, and the maximum collateral cap will increase by 1000 Theta each week, enabling miners to unlock up to an additional $175k of capital per week.

Depositing Collateral

Before a miner can deposit or withdraw collateral, all open positions must be closed. In order to maintain consistency in daily scoring, collateral changes also only take effect at the end of the day. Deposits made during the day (e.g., at 10AM UTC) will not affect capital allocation for that day until midnight UTC. After the release of V2, the rate of change of collateral will be capped at 50% over any rolling 45-day window to enforce consistency and discourage gaming.

Withdrawing Collateral and Slashing

Withdrawing collateral has similar constraints to depositing. All open positions must be closed prior to withdrawal. The amount of collateral eligible for withdrawal depends on the miner’s returns and drawdown. If a miner is in good standing and their returns are positive, they are eligible to withdraw their entire collateral amount. If their returns are negative, the miner is only able to withdraw a portion of their collateral, dependent on their max drawdown. If a miner is eliminated for exceeding the 10% max drawdown, 50% of their collateral is slashed, and 50% of their collateral will be returned.

Example:

  • A 2% drawdown allows 90% of collateral to be withdrawn.
  • A 6% drawdown allows 70% of collateral to be withdrawn.
  • A miner exceeding 10% drawdown will be eliminated and 50% of their collateral will be returned.

The introduction of collateral marks a major step forward in strengthening the integrity and scalability of the network. By tying capital access to a miner’s Theta deposit, we’re aligning incentives around responsibility, performance, and long-term commitment. V1 provides a smooth, transitional on-ramp for miners to get familiar with the system, while V2 brings full enforcement, ensuring that only those who meet collateral and asset class requirements can continue to participate in the network. This shift helps filter out low-effort participation, promotes healthy risk practices, and enables sustainable network growth. We believe this model creates a stronger, more resilient ecosystem and encourages miners to invest meaningfully in their role within it.

Timeline and Change Log

V1 on Testnet: July 14

  • Integrate collateral v1 with testnet, and launch ptncli.

V1 on Mainnet: July 21

  • Integrate collateral v1 with mainnet.
  • Collateral deposits are optional but highly encouraged in this phase.
  • Miners may select an asset class (e.g., crypto or forex). This selection is permanent and cannot be changed later.

V2 on Mainnet: August 4

  • Integrate collateral v2 with mainnet.
  • Collateral deposits and asset class selections are required in this phase.
  • Collateral cap increases weekly, starting Aug 11 (+1000 Theta per week).