# Subnet

#### Introduction

TensorUSD Subnet SN113 that enables Decentralized Market Maker (DMM)  for TAO-backed stablecoins. Built on the Bittensor network, it uses a miner-validator architecture to create a trustless marketplace where miners act as a Decentralized Market Maker (DMM) to fulfill buy and sell orders for ALPHA tokens in exchange for rewards.

**TensorUSD** Subnet is a specialized network that:

* Incentivizes participation through performance-based rewards
* Ensures quality using validator scoring
* Maintains decentralization through cryptographic verification

#### Subnet Architecture

The TensorUSD subnet consists of four main components.

<figure><img src="https://2800809789-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCUTQy9XCNtZbiGWrE6nM%2Fuploads%2F6oXnd2rtsUHJfFRIsVxv%2FScreenshot%202025-12-18%20at%2023.39.05.png?alt=media&#x26;token=260eec3d-6a72-486b-8ae5-fe59059259a0" alt=""><figcaption></figcaption></figure>

#### Core Components

**Miners**&#x20;

Miners hold TAO and ALPHA tokens, fulfill orders, execute on-chain transactions, and earn rewards based on performance.

**Validators**&#x20;

Validators score miners using EMA-based metrics and set weights on the Bittensor chain.

**Platform**

The TensorUSD platform distributes orders, authenticates miners, tracks order states, and supplies performance data to validators.

**Bittensor Network**

The blockchain layer that registers participants, executes staking operations, and distributes emissions.

#### Benifits of Subnet to:

#### Miners

* Earn Rewards: Generate income by being Decentralized Market Maker
* Flexible Participation: Sets own limits and availability
* Transparent Scoring: Understand exactly how you're evaluated
* Decentralized: No central authority controlling your participation

#### &#x20;Validators

* Support Network: Contribute to subnet health and fairness
* Earn Emissions: Receive rewards for validation work
* Influence Quality: Help maintain high standards across the network

#### Net Flow–Based Performance Evaluation

To ensure reliable market making provision and consistent order execution within the TensorUSD subnet, miner performance is evaluated using a Net Flow–based scoring system. This mechanism directly measures a miner’s ability to accept and successfully complete alpha swap transactions.

#### Net Flow Calculation

```
Net Flow = Total Stake Amount + Total Stake Amount 
```

#### Exponential Moving Average (EMA)

To avoid penalizing miners for short-term disruptions while still capturing long-term behavior, the subnet applies an Exponential Moving Average (EMA) to net flow values.<br>

`Validator Evaluation Cycle = 150 Blocks (30 Mins)`

`Alpha (⍺) = 0.001`

`EMA[t] = Alpha * Net FLow + (1 - Alpha) * EMA[t-1]`
