The Bittensor project has serious problems, and the TAO token is at risk.

Although Bittensor has always claimed to be a "fair mining" project, in reality, its underlying Subtensor is not a true PoW or PoS public chain, but a centralized system controlled by its foundation, with an opaque operating mechanism.

The so-called "Triple Head + Senate" dual governance structure, in fact, the three heads are fund member employees, and the Senate is composed of the top 12 verification nodes, all of whom are insiders or stakeholders.

From the network activation in January 2021 to the launch of the subnet in October 2023, Bittensor has mined 5.38 million TAO. However, the distribution rules and flow of this portion of Tokens are unclear, and they may be divided among internal members. A conservative estimate suggests that at least 62.5% of TAO is held by insiders and interest groups, with the actual proportion possibly being higher.

The market capitalization of TAO Token is inflated, while the actual circulation volume is very low. The historical staking rate has consistently remained between 70% and 90%, which means that at least $1.4 billion of TAO has never participated in circulation. The actual market value is only $600 million, while the fully diluted valuation is as high as $5 billion, making it a typical case of low circulation and high market value.

The dTAO upgrade seems more like providing an exit opportunity for early investors. By issuing subnet tokens and attracting investors to purchase with TAO, it aims to provide liquidity for insiders to sell their TAO. However, due to the closed ecosystem and the market turning bearish, the plan failed to attract enough external funding.

Data shows that since the launch of dTAO, approximately 300,000 TAO(, worth about 70 million USD), have flowed out from the root network and may be liquidated on centralized exchanges. This indicates that large holders are collectively fleeing.

The dTAO model undermines the consistency of interests among all parties in the original ecosystem, as both subnet project parties and miners are essentially creating value for the verifying nodes. This model fails to provide effective incentives for subnet projects and may instead encourage them to choose independent development.

Overall, Bittensor is facing the risk of collapse in its economic model. Its original advantages are being lost, and the future development prospects are concerning. Investors should cautiously assess the related risks.