TAO Halving Impact: Alpha Tokens, Liquidity, and Subnet Survival Strategies

1. TAO halving reduces block emissions from 1 to 0.5 TAO, tightening an already deflationary system.
2. Subnet alpha tokens face structural pressure as liquidity drops, creating winners and losers before price changes appear.
3. Post-halving, survival depends on strong fundamentals, sustained flows, and strategic staking choices.

The first TAO halving is projected for mid-December 2025, though exact timing remains fluid due to Bittensor’s unique mechanics. Unlike Bitcoin’s straightforward halving, TAO operates on a multi-layered system where subnet tokens, liquidity pools, alpha burns, root proportions, and flow-based emissions interact in ways that affect every participant differently.

Expert Andy notes that these complexities mean traditional supply shock narratives only tell part of the story. The halving triggers when total issued the token reaches 10.5 million, not circulating supply, accounting for recycled tokens from subnet registrations, miner and validator activity, and other on-chain actions.

With current block emissions at 1 TAO per 12-second block, roughly 7,200 TAO enter circulation daily. After the halving, this falls to 3,600 TAO per day, cutting annual issuance from around 2.6 million to 1.3 million.

Subnets Introduce Individual Alpha Tokens and AMM Swaps

Alpha tokens are assigned now to every subnet. In the case when the TAO is staked into a subnet, it is replaced with alpha by an automated market maker. The alpha distribution is divided into alpha out and alpha in, which represent rewards to the participants and liquidity to the pool, respectively. The alpha_ in is cut by half, and the alpha out does not change.

This structural change increases volatility: miners who must sell alpha to make ends meet now are exposed to less liquidity, and it puts pressure on the alpha prices downwards. Small pool subnets are the most susceptible to attack, whereas early, well-financed subnets become permanently advantaged.

Alpha token trajectories are also influenced by the halving, shifting one subnet halving towards the future. Subnets with alpha building up until halving have the advantage of experiencing a quicker early supply growth, and subnets with halving after have a worse liquidity situation.

Performance Depends on TAO Flows, Coverage, and Alpha Burns

The downsizing doubles the competitive nature of the network. Subnets should be able to attract sticky capital and create real utility to exist. Weak subnets will be at risk of deregistration as slots will be occupied, and miners and validators will migrate to better subnets. Root staking offers a safer option, which conserves TAO but yields diminish with time.

Expert Andy stresses that it is now survival and profit based on observation of net TAO flows, coverage percentages, and alpha burn rates, as opposed to price. Subnets with better coverage and stable alpha burns will perform better, and those that are not able to sustain liquidity will experience a higher rate of decomposition.

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