DCG subsidiary Yuma highlights subnet development in 'State of Bittensor' report

Digital Currency Group subsidiary Yuma published its second annual report on the "State of Bittensor," the decentralized AI ecosystem, finding that the aggregate subnet token market cap has hit a record 27% of the market cap of Bittensor's native TAO token. 

Bittensor, to some degree, is like the crypto industry in a microcosm. The blockchain allows developers to deploy "subnets," or independent mini-networks, focused on specific AI use cases. 

According to the report, there are now over 120 subnets, including Ridges, a code generation tool like Claude Code, Score, a computer vision project that can process raw video streams, and Targon, which offers access to confidential H200 GPU compute at $2 per hour. 

"As the decentralized AI market matures, value is beginning to concentrate in Bittensor subnets solving meaningful problems, offering viable alternatives to the closed, centralized systems controlled by tech giants," DCG CEO Barry Silbert said in the report's preface.

While Bittensor is still little known outside of the crypto industry, DCG has taken a big bet on the network, including spinning up its Yuma subsidiary, which is entirely focused on accelerating Bittensor adoption. Polychain and dao5 were also early backers of Bittensor.

Grayscale, DCG's crypto asset manager, also offers a TAO trust, while Yuma Asset Management, launched in late 2025 with a $10 million DCG anchor, launched composite funds that invest in subnet, or "alpha" tokens. 

According to the report, Yuma's Composite Fund, weighted to the largest subnets, has decreased by 31.9% since launching on Sept. 4, while the TAO price fell 46.1% over the same period. The fund has also outperformed earnings from TAO staking rewards. 

"For the first time, the market has an investible alternative to TAO staking, absorbing high alpha token staking rewards while smoothing subnet-level volatility and mitigating idiosyncratic token risk," the report said. 

Several digital asset treasury companies have sprung up to invest in and stake TAO tokens, including Oblong, TAO Synergies, and xTAO, the latter of which is backed by DCG and Animoca Brands.

Subnet valuations

Another metric, Total Subnets Price, used to measure the cumulative value of subnets as denominated in TAO, reached above 2.5 after subnet tokens were first introduced in February 2025's Dynamic TAO upgrade, and dipped below 1 in the months leading up to the network's first halving in December. 

TSP, registering at 1.18 as of last month, gives a sort of snapshot into the perceived value of the entire subnet ecosystem as well as the pricing power of TAO. Although TSP is an imperfect metric, the report suggests this post-halving rebound indicates more value is flowing to subnets.

Along those lines, the top 20% of subnets currently capture over 55% of TSP, down from when the top 20% of subnets capture over 82% of TSP following the introduction of alpha tokens, signaling increasing economic diversification among subnets. 

The report noted that, to the extent that subnets operate as standalone businesses, some function more like "startups utilizing the subnet outputs to build language models without needing massive upfront capital," while others are already established operations that have extended onto Bittensor. 

Adoption is arguably slow-going compared to the rapid uptake of closed-source AI models like ChatGPT, often called the fastest-growing consumer app in history, though there are real-world use cases. The Reading Football Club, for instance, has tapped Score's flagship video intelligence product, Manako, to process football game data. 

Another subnet, Yanez Compliance, offers a financial crime prevention scanner and biometric data API that have secured "multibillion dollar clientele." 

For context, users can stake TAO into a subnet's liquidity pool to receive its alpha tokens in return, effectively voting with their TAO on which subnet's are valuable. The price of a subnet's alpha token is determined by the ratio of TAO to alpha in its pool, and subnets with higher market demand receive a larger share of daily TAO emissions.

There is a flywheel in that subnets contribute economic value to the whole Bittensor network by offering AI services and commodities, which in turn attracts stakers and users that drive demand for TAO.

"It's still early, but we're seeing the first signs of this value flow back into subnet tokens, which are becoming more than just network incentives," Silbert wrote. "They are functioning as market validation, signaling the value that each subnet provides to the overall network and the intelligence it generates."

Protocol changes

In December, Bittensor completed its first network halving. Bittensor's TAO token follows a similar issuance schedule as Bitcoin, with a 21 million token cap that will be slowly circulated as blocks are mined. 

Bittensor's first halving triggered four years after network launch when half its total supply entered circulation, cutting the rate at which new TAO tokens are emitted into liquidity pools from 7,200 per day to 3,600. 

"The TAO price trended down to the $150-$200 range in early February 2026 alongside the broader crypto market sell-off," the report said. "However, the industry is closely watching to see if TAO will follow the upward post-halving trajectory repeatedly witnessed in Bitcoin after the rate of new supply was halved."

Silbert has suggested in the past that TAO could become the next bitcoin. 

Looking ahead, Bittensor is planning to roll out a governance update in the first half of the year, which will enable validators and subnet owners to vote on future protocol upgrades. Also, in the coming months, Bittensor is transitioning from its Proof of Authority consensus model, where only select participants are permitted to approve changes to the ledger, to the more democratic Nominated Proof of Stake.