subnet pools are liquidity pools that are used to exchange tao for alpha tokens

What is a Subnet Pool?

A subnet pool (AKA liquidity pool) is a way to exchange between two currencies. In the case of subnet pools, they are used to exchange tao into the subnet's alpha token. There are two values in the subnet pool: alpha_in and tao_in

• alpha_in: The amount of alpha currently in the subnet pool
• tao_in: The amount to tao currently in the subnet pool.

Inside the pool, the tao/alpha ratio is a constant. Another way to think about this is that the product of the to values is a constan k:

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Example subnet pool (shown in yellow) with 100τ and 100α.

k = 100* 100 = 10,000

Emissions

Each block, tao and alpha are emitted into the liquidity pool.

• Tao emission
• Alpha Emission

Note that the value of k with change with each block as a result of this emission.

Alpha Price

The subnet pool determines the alpha price (shown in tao).

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If there is 100 tao_in, and 100 alpha_in, the α_price will be 1 tao.

Subnet Pool Initialization

When a new subnet is registered, how much tao is placed into the pool?

• initial_tao = min(1 tao, max(lock,1))
  • The cost is how much it costs to register the subnet.
• initial_tao*number_of_subnets

In English:

If it costs over 100 tao to register the subnet:

• 1 tao
• 1 *(number of subnets) alpha

If the cost to register is under 1 tao:

• registration_cost tao
• registration_cost * number of subnets alpha

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Examples

Registration cost is 1,000 tao, and there are 64 subnets:

pool tao = 1 tao

pool alpha = 1*64 =64 alpha

Note: The remaining tao of the registration cost is Recycled.

Registration cost is 50 tao, 100 subnets

pool tao =1 tao

pool alpha = 1*100 = 100 alpha