Subnet Investing

Let’s talk a bit about subnet investing. By the way, this is not financial advice, just my take on the current subnet situation. There has been quite some drama recently (Covenant exit, ORO owner wallet drain…)

Every subnet building on Bittensor has its own subnet token. To acquire it, one has to stake TAO into the subnet’s liquidity pool (it’s kind of a swap between the TAO and subnet token). Every subnet token is denominated in TAO. At this moment (July 2026), the highest priced subnet is Chutes (SN64) with a price of about 0.075 TAO. This means that if you stake 1 TAO, you’ll obtain 1/0.075=13 chutes tokens.

Now why would you want to invest in subnet tokens if you could just hold the TAO token? Probably because the APY on these subnet tokens is much bigger then that for root staking (30-60% on average at this moment for most subnets vs 6-8% for root). And because some of these subnets might become very successful, and you expect the price of the token to go up. I say this all the time, but Bittensor can only be successful if some of the subnets are successful. If not, then Bittensor fails.

However, I would like to say to everyone: be very careful what you do with your precious TAO tokens! If Bittensor succeeds, the TAO token itself should already become pretty valuable. Why? Because it captures the value of the entire ecosystem (or at least that’s the idea). It is like buying the S&P500. It gets more valuable if the subnets get more valuable. 

And some people like Barry Silbert say that Bittensor is where the internet was in the early 90s. Lots of online businesses and websites but very hard to know which ones will become the megasuccessful companies we all know these days. This means that most subnets that exist today will probably fail. And this means your investment (if you pick the wrong ones) also will result in losses. This does not mean Bittensor fails. In my opinion we only need a few unicorns that prove to the world why building on Bittensor is worth it and Bittensor will succeed. 

Here are some of the lessons I’ve learnt and that you might find useful as well when thinking about subnet investing (not trading by the way but longer horizon investing).

1 Only use TAO you can afford to lose for subnet staking. If you have 20 TAO, decide for yourself if you can live with yourself if you lose 10, 20, 30, … % of your total TAO holdings. Say you can avoid panic selling your staked TAO when subnets (temporarily) nuke if all you invest in subnets is just 2 TAO, then do this.  This is different for everyone. Some people can develop such high conviction in certain subnets that are able to invest 50% of their TAO in a single subnet. I would be very very cautious about this though. As mentioned before, most subnets will most likely fail in the coming years and you’ll lose most of your TAO. And what you need to realize is that your wallets will show the amount of TAO you hold. If subnets go down in price, then your TAO holdings go down as well. Imagine you start with 20 TAO and you stake 2 TAO into subnets, at any point in time your wallet might display ‘19.2’ or ‘18.9’ TAO if the prices of the subnets you invested in go down significantly. On the other hand, if their prides go up, your wallet might display ‘20.8’ TAO. You have to understand: this value changes every minute. If you only stake 2 TAO into subnets, you’ll know that your total portfolio will never go below 18 (actually a little bit higher most likely thanks to root apy). If you were to stake say 20/20 tao into subnets, and your portfolio goes downs 20%, your virtual portfolio shows you only got 16 TAO at that moment. This may make you go nuts and you end up unstaking your TAO (flying to root). However, had you not panicked, then maybe a couple of weeks later, your portfolio could have displayed 22 TAO as the subnet priced could have recovered. You see my point? You should probably only stake the amount of TAO into subnets that enables you to feel confident about your portfolio even if subnet prices (temporarily) go down.

2 Spread your TAO out over multiple subnets and avoid too heavy concentration. Say you have very high conviction about Score or Chutes, the reality is they can still fail/get hacked etc. so if you stake, say, 40% of your TAO in one of these subnets, you have to understand that you could lose a lot. Think about the Covenant exit. In just a couple of hours the price of top 10 subnets (Templar and Basilica) fell about 50%… Like ‘normal’ investing, it is probably best to select a handful of subnets and divide your TAO over these subnets. Take a look at the website of Trusted Stake or Mentat Mind. They have index funds/strategies and you can learn a lot by observing their allocations. What you often see is that they allocate disproportionately more into the top 10 subnets than the bottom 50. You can even let them manage your wallet by adding a proxy to your wallet.

3 Be careful with low-priced subnets close to deregistration. One might think ‘oh these lower priced subnets have a price of about 0.0035 tao, whilst the number 1 subnet has a price of 0.075. So a factor 20 difference. It is way easier for these lower priced subnets to go up significantly then the higher priced subnets.’ The problem is that these lower priced subnets are at much higher risk of deregistration then the top 30 subnets. You might lose most of your TAO if you invest it in low-priced subnets that get deregistered. Low priced subnets are more interesting for traders then investors in my opinion.

4 Focus on revenue and team quality when deciding which subnets to select. At this moment, I would say that there are about 20-30 quality subnets. The rest is inactive or a scam or super experimental. Also, it is much easier to hold a subnet token if you have confidence in the people behind it (and who you have seen on podcasts/interviews etc.). Focusing on revenue is also rather important in my opinion because subnets can use revenue to buy (and burn) their subnet token, therefore reducing supply and potentially increasing the price. Subnets without revenue can’t do this and their token price is only based on speculation. In general I would say most current evaluations are almost purely speculation-based tough it seems like the market prices the subnets with revenue higher then those without (but not sure if this correlation is airtight). 

5 Have a look a institutional money and their subnet choices. DSV, Stillcore Capital and others often publicly declare which subnets they support. I find it useful to see if the subnet I want to stake my TAO into is supported by these institutional investors.

6 The more exciting subnets are not necessarily the best investments! There are many interesting or exciting use cases for subnets that could make you want to stake your TAO into them. But be careful. It does not mean they are good investments (at any given price). Especially when people talk about them too much it is often a sign of a (local) price top then a good moment to get into them… I know of many subnets that I like(d) but that have way too high prices. It is important to control your emotions and not FOMO in. Especially with new subnets. Most reach crazy prices in the first days/weeks after launch. But then they fall back for weeks or months on end (famous example is Ridges). Also, many subnets might seem exciting or useful but it turns out that the team is not able to commercialize their product, or there are other issues that are not related necessarily to the subnet, but more to the teams behind them. You as an investor cannot know this most of the time. That’s why subnets remain risky in my opinion. One tool you can use is Conviction, which shows how many subnet tokens a team has locked up for a longer duration and hence, which subnet might earn your trust. Another useful tool is taoflute. Taoflute displays useful data such as alpha burnt, activity and more. A bit technical for newcomers but a great tool to learn more.