Key Concepts

Bittensor Day

A "Bittensor day" consists of 7,200 blocks. While the actual time may fluctuate slightly, this measurement is used because hotkeys are drained every 7,201 blocks.

Non-Viable Stake

Stake added during a hotkey epoch is considered "non-viable" and ineligible for nominator rewards during that epoch. This prevents system abuse where nominators might add stake just before drainage to receive higher rewards.

Calculation Process

Required Measurements

stake_before_reward: Nominator's stake on the block before validator's hotkey drainage
non_viable_stake: Nominator's non-viable stake on the block before validator's hotkey drainage
stake_after_reward: Nominator's stake on the block of validator's hotkey drainage
Important: Verify no stake/unstake actions occurred on this block

Formula

viable_stake = stake_before_reward - non_viable_stake
profit = stake_after_reward - stake_before_reward
multiplier = 1000 / viable_stake
nominator_return_per_1000_tao_per_day = profit * multiplier
apr = nominator_return_per_1000_tao_per_day * 365

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The Law of Big Numbers (AKA the Whale Effect)

Nominator returns can increase significantly when a whale (large stakeholder) joins a validator. This occurs because:

1. Non-viable stake is still considered viable by subnets during their epochs
2. Subnets continue to drain pending emissions to hotkeys
3. When a whale stakes on a validator with little existing stake, their contribution generates rewards that are shared among:
   • The validator
   • Existing nominators

This creates an opportunity for smaller stakeholders ("prawns") to receive unexpectedly high returns if they're positioned on a validator that attracts a whale investor.