🔍Yield Optimization Logic

Staking TAO tokens within a subnet can be done in two ways; by delegating to a subnet validator, or running your own validator. For each subnet, only the 64 largest validators are considered to be active and earning rewards - referred to as having validator permit. Accordingly, depending on the TVL of yTAO, TaiNet will either delegate to an existing validator in order to be within the top 64, or establish its own validators. Initially, TaiNet will pursue the former strategy solely, as it is unlikely the protocol will have meaningful TVL in early stages, making validator delegation a higher yield option.

To estimate a validator's performance, Tainet's AI calculates an approximate Annual Percentage Yield (APY) for each validator by summing their hourly yield across all participated subnets and dividing by the number of subnets. The APY is then estimated using a compound interest formula. Validators are ranked based on their calculated APY weight, with the top 5 highest APY weights selected as the best performers. The AI considers factors such as tempo (emission rate) for different subnets, skips inactive validators, and excludes those with zero stake. It runs periodically to keep the best validator list up-to-date. This comprehensive evaluation allows for the identification of the most effective validators across the Bittensor network, considering their performance in multiple subnets and various performance metrics.