Bittensor is an open-source protocol that powers a decentralized, blockchain-based machine-learning network. TAO is the native cryptocurrency for Bittensor and it is rewarded to machine learning models that train collaboratively and according to the informational value they offer the collective. ^[1][2][3][4]

Overview

Bittensor is a mining network, similar to Bitcoin that offers censorship-resistant access to a decentralized network of machine learning models. It was developed by the Opentensor Foundation^[8] and founders, Jacob Robert Steeves & Ala Shaabana in 2021. ^[1][9]

Bittensor presents a strategy for the development and distribution of artificial intelligence technology through the utilization of a distributed ledger. This involves aspects such as open access/ownership, decentralized governance, and the utilization of globally distributed computing resources within an incentivized framework. ^[3][5]

Additionally, it operates as an open-source repository of machine intelligence which also distributes rewards and network ownership based on the value contributed by users. ^[4][5]

Bittensor uses Proof of Intelligence, a consensus mechanism to reward nodes that contribute valuable machine-learning models and outputs to the network. It is a variation of the Proof of Work (PoW) and Proof of Stake (PoS) mechanisms used in blockchain networks, but instead of solving complex mathematical problems, nodes are required to perform machine learning tasks to demonstrate their intelligence. The more accurate and valuable the output of a node’s machine learning model, the higher the chance of being selected to add a new block to the chain and receiving rewards in the form of TAO tokens. ^[9]

Bittensor Protocol Technology

The Bittensor Protocol is a decentralized machine learning protocol that enables the exchange of machine learning capabilities and predictions among participants in a network. It facilitates the sharing and collaboration of machine learning models and services in a peer-to-peer manner. ^[5][9]

Network Architecture

The Bittensor network consists of a set of nodes (miners) that participate in the protocol. Each node runs a Bittensor client software that enables it to interact with other nodes in the network. ^[9]

Registration

The Bittensor Protocol operates through a registration process that involves the registration of a hotkey. To participate in the Bittensor network and mine Tao tokens, users are required to register a hotkey by either solving a proof of work (POW) or paying a fee using the recycle_register method. ^[9]

Subtensor

Once registered, a node becomes part of a subnet, which is a specific domain or topic within the Bittensor network. Each subnet has its own set of registered nodes and associated machine-learning models. ^[9]

Validators

Validators are responsible for validating the responses and predictions provided by the miners. Validators ensure the integrity and quality of the data and models being exchanged within the network. Validators query miners and evaluate their responses to determine the accuracy and reliability of their predictions. Validators serve as intermediaries and access points to the Bittensor network enabling interaction and providing an interface for users and applications. ^[9]

Mining

Miners in the Bittensor network provide machine learning services by hosting and serving their locally hosted machine learning models. When a client application requires a prediction, it sends a request to the Bittensor network, which routes the request to a miner that has registered itself as a provider for the required service. The miner processes the request using its locally hosted machine learning model and returns the prediction back to the client via the Bittensor network. ^[9]

Consensus

The Bittensor network uses consensus algorithms to reach an agreement on the state of the network and ensure the integrity of the data being processed. Consensus mechanisms help prevent double-spending, ensure data consistency, and maintain the overall security of the network. ^[9]

Incentive

The Bittensor network incentivizes participation and contributions through a token-based economy. Miners and validators are rewarded with TAO tokens for their computational resources, accurate predictions, and other valuable contributions to the network. These incentives encourage active participation and help maintain the network’s stability and efficiency. ^[9][7]

TAO

TAO is Bittensor's native cryptocurrency, incentivizing AI technology development and distribution. It also grants external access, allowing users to extract information from the network while tuning its activities to their needs. It is used for governance, staking, and as a means of payment for accessing AI services and applications built on the Bittensor TAO network. ^[2][7][9]

The total supply of Tao is limited to 21,000,000 units, and its distribution is governed by a halving cycle. This means that after every 10.5 million blocks, the block rewards are reduced by half. Presently, the network generates a single Tao every 12 seconds, which adds up to one block per step. There will be a total of 64 halving events, with the first one scheduled to take place in August 2025. ^[7]

$8M Theft

On July 3, 2024, Bittensor was forced to shut down its network activity following a series of wallet drains that stole at least $8 million worth of digital assets. ^[10]

Ala Shaabana, the co-founder of Bittensor, announced the network outage as a way of containing the exploit.

"By way of an update, we have contained the attack and put the chain into safe mode (blocks producing but no transactions are permitted). We’re still mid investigation and are considering all possibilities. Stay tuned." - Ala Shaabana tweeted on July 3, 2024^[11]

Pseudonymous onchain investigator ZachXBT first discovered the theft in a July 3 Telegram message. He wrote:

“Bittensor was halted due to additional thefts earlier today potentially as a result of private key leakage.”

The unknown address “5FbW” was exploited to obtain 32,000 Bittensor (TAO) tokens worth approximately $8 million. This attack comes a month after a different wallet was drained for $11.2 million worth of TAO tokens on June 1, 2024, according to ZachXBT. ^[10]

Root Cause

In a July 3, 2024 postmortem report handled by The OpenTensor Foundation (OTF), the root cause for the breach was identified as a malicious package in the PyPi Package Manager. The compromised package masqueraded as a legitimate Bittensor library but contained code designed to steal unencrypted cold key details, sending the decrypted bytecode to a remote server controlled by the attacker. The breach affected users who downloaded the PyPi Package Manager version 6.12.2 between May 22 and May 29 and performed specific operations such as staking, wallet transfers, or delegation. ^[12]

Following the discovery, OTF quickly removed the malicious package from the PyPi Package Manager repository and thoroughly reviewed the Subtensor and Bittensor code on GitHub. No other vulnerabilities were identified, but the team continues to assess the code base and investigate potential attack vectors. ^[12]