Emission Updates And What's Next

We always strive to be transparent with our community and with the people who watch this ecosystem closely. In that vein, we would like to take a minute to talk about the recent emission halt on @QuantumSN48 and @EnigmaSN63.

This article contains our full account: what happened, why we think it happened, what we are changing, what is still unanswered, and why we believe both subnets come out of this stronger than before.

What Happened

On September 2nd, we received messages from @const_reborn in both the SN63 and SN48 discord channels, indicating that he perceived there to be key problems with each. As a result of this perception, emissions were subsequently disabled on both. We were given no warning that this was coming and were provided with minimal guidance on how to correct it.

SN48

Emission on SN48 was halted on a concern that the subnet was being farmed: that rewards were accumulating to our own keys, that a block of TAO sat parked on a non-owner key, and that, because we were not selling, emission was being collected without real work or real distribution behind it.

What Was Actually Going On

SN48 alpha is the first coin that can only be mined with a QPU, and real QPUs are hard to come by.

To make sure miners are offering real quantum hardware, and not fake or simulated QPUs or other ways for bad actors to take emission without a real exchange of value, we require an onboarding audit that proves a miner has access to genuine QPU resources.

We have always been fully open that we operate the miners ourselves, working directly with the hardware owners who are willing to make QPU capacity available but do not want to run a miner. That is how the subnet had genuinely real quantum compute at launch, and it is also why emission concentrated: by necessity, we were the miner.

We chose to cover operating costs in USD rather than sell alpha into a young market, absorbing the cost ourselves to help the subnet incubate into a strong compute network. The parked TAO is the byproduct of that.

Why It Looked The Way It Did

We understand how, from the outside, those same facts could raise some eyebrows. With us running the miners, emission flowed to our own keys, which is hard to tell apart from an operator simply paying itself.

Idle, unspent funds look staged and low selling reads on a quick scan as farming, since a fast observer asks why an operator would hold unless it were gaming the system. Together, without looking at the actual jobs underneath look unusual.

While we have been transparent about it, we own that we helped create that ambiguity, and it is on us to remove it.

What We're Changing

We are opening SN48 so anyone can mine, verifying every job through Open Quantum, and routing all miner emission in real time to fair distribution based on who is actually performing the work.

An open, verified market is its own proof. When anyone can register and take jobs, and every job is checked against real execution, emission can only be earned by actually doing the compute. There is no way to farm an open, verified market, and nothing is left parked. The question that triggered the halt simply cannot be asked of the new design.

SN63

Emission on SN63 was flagged on a different concern: that the prize vault functions as a hidden burn, that most of the vault sits unpaid while we continue to draw full emission, so what we collect is out of proportion to what actually circulates.

What Was Actually Going On

Enigma was designed to fund hard, high-value challenges: starting with cryptanalysis and quantum problems that take weeks or months to solve.

The prize pools are built up before a challenge is won, which is exactly how you attract serious talent, including Fortune 100 quantum leads, to work that difficult.

For ~6 months, we routed our owner emission into prize pools to seed them. A large pool that has not yet paid out is the design working, not a burn in disguise. But we can see how, from the outside, a big unpaid vault plus full emission looks like emission decoupled from real use.

What We're Changing

We are capping each challenge's prize pool. Once a pool is full, further emission into it is burned rather than banked.

The concern is that, if miner emission is not spent, it should be burned, and we should be penalized with the new mechanics. Our need is to have large pools that attract outside innovators. This meets in the middle.

With each pool bounded, we ensure that the pools can grow, but that in the long run, what we draw cannot permanently outrun what actually gets paid out, and beyond the cap it burns. That is precisely the ask: keep emission in proportion to real burn. The pools sit near the cap today, so funding would continue normally, and burning would begin only if a pool later fills past its ceiling.

This incentivizes us, the subnet operator, to issue larger prizes, which in turn requires higher-value targets, and to broaden the challenge pool faster, taking on more and more high-value challenges.

Emissions Return

This morning, September 9th, emission was restored to all subnets affected by this cutoff. This occurred just as suddenly as the initial cutoff and with no communication on the matter. While we have some ideas, the factors that led to the return of emission is ultimately a mystery to us and leaves us with a number of questions, despite numerous attempts to get clarification from founder and company handles.

The Aftermath

Although the restoration of emission is a huge positive step, it does not undo the damage that was done to the visionary dTao investors who understood the vision, and put their faith in us and in Bittensor.

Both subnets were victim to massive dumps with Enigma's price falling by ~50% before this was resolved.

It's unclear if this was a single human choice, an AI choice, a committee decision. It's not clear why it was undone. It's not clear how it can be appealed, or remedied.

What is clear is that we have a lot of questions unanswered.

What's Still Unanswered

As it stands now, we've received very little information from the makers of these decisions about how they are made, who's making them, what criteria we were evaluated on (so we can avoid this in the future), and why things are suddenly back to normal.

We've attempted to reach key members who we believe are involved in these decisions to discuss the situation, but have been met with quiet on all fronts.

We are massive proponents of rapid innovation and believe that all decisions made were made in good faith for the long term benefit of the network. But that does not discount the fact that decisions seem to have been made unilaterally with no warning, no conversation, and no way to rectify the situation.

In the future, we would love some more clarity and the opportunity to discuss problems with the subnets before such drastic decisions are made. We are still eager for answers on what transpired this past week. If anyone at @opentensor is open to having that conversation, please let us know.

Why We're Optimistic About The Future

While we disagree with the decision that forced the changes we've described, we are not going to waste it: each one leaves the subnets materially better than they were before. Iron is forged in fire, as they say.

• SN48 becomes a truly open market: Opening mining turns SN48 into the kind of open, verified compute marketplace the market already understands and values, and it pulls in a far larger, more competitive pool of miners, including quantum orgs and hardware owners who can now mine directly rather than only supplying us capacity. That puts it on track to sit alongside the great compute subnets of Bittensor, which hold top positions among the network's innovators.
• Verification becomes a standard, and a moat: Because mining is open, and every job is proven against Open Quantum, the market gets proof that real execution is the only way to earn. That raises the quality of the whole network and drives volume and data onto the platform that underpins both subnets.
• Enigma gets more disciplined and more fundable: Bounded pools make SN63 emission honest and legible, and ensure we run only genuinely valuable, marketable challenges, paid out faster for larger innovations. Growth comes from solving hard problems and paying real prizes in exchange for valuable IP, which is the story we have been telling the whole time.
• Incentives line up: With pools bounded in alpha and burn as the consequence for filling them, the subnet operator, validators, and dTAO investors are all pulling the same way: to keep the subnet disciplined and aggressive, paying out larger rewards more frequently, expanding the portfolio of challenges, and growing the IP we are building as we prepare to advance industries and license the breakthroughs behind them.

We believe both subnets are better designed after these changes than they were before the halt and look forward to the new energy that these changes bring. To those of you who stuck with us during this difficult time, thank you for your continued support and unwavering faith. We can't wait to show you what's next.

The qBitTensor Labs Team 🩵