Federated Miners
Role: External investors who lock capital through registered principal miners without operating Bittensor infrastructure.
Also known as: External Liquidity Providers, Pool Participants, Delegators
Overview
Federated Miners enable anyone with USDC and an EVM wallet to participate in Cartha subnet's liquidity provision without the technical complexity of running Bittensor infrastructure. You lock capital through a registered principal miner's hotkey, maintain full ownership of your position, and can withdraw after your lock period expires.
Key Benefits
✅ No Bittensor Setup Required - Just an EVM wallet and USDC
✅ Full Capital Control - You own your position via smart contracts
✅ Direct Withdrawals - No principal miner approval needed to withdraw
✅ Choose Your Manager - Lock to any registered principal miner
✅ Flexible Lock Periods - 1 day to 5 years
Key Considerations
ℹ️ Emissions Go to Principal Miner - ALPHA emissions are sent to the principal miner's Bittensor wallet, not your EVM wallet
ℹ️ Profit-Sharing Agreement - Establish distribution terms with the principal miner separately
ℹ️ Your Funds Stay Yours - Principal miner cannot access your capital; you maintain full control
⚠️ LP Risk Applies - Liquidation losses from providing DEX liquidity may occur
✅ No CLI Required - Everything can be done through the web interface
Quick Start
1. Get USDC and ETH
Mainnet (Base):
USDC: Purchase on exchanges or bridge to Base
ETH: For gas fees (small amount needed)
Testnet (Base Sepolia):
ETH Faucet: https://console.optimism.io/faucet
USDC Faucet: https://cartha.finance/faucet
2. Set Up Your Wallet
Install and configure an EVM wallet:
MetaMask (browser extension)
Coinbase Wallet (mobile or browser)
WalletConnect (mobile wallets)
Add Base network:
Or for testnet (Base Sepolia):
3. Choose a Principal Miner
Find a principal miner to lock through:
Research:
Track record and reputation
Profit-sharing terms
Distribution frequency
Communication channels
Pool strategy
Get Their Hotkey:
48-character SS58 address (starts with
5)Example:
5GrwvaEF5zXb26Fz9rcQpDWS57CtERHpNehXCPcNoHGKutQY
4. Lock Your Funds
Via Cartha Lock UI ✅ Fully Self-Service
Visit: https://cartha.finance/create-lock
Connect your EVM wallet
Enter principal miner's hotkey (SS58 address)
Select pool (BTCUSD, ETHUSD, EURUSD)
Enter amount and lock duration (1-365 days)
Click "Request Lock Signature" - the system will:
Verify the hotkey is registered on the subnet
Generate the required signature automatically
Direct you to Phase 1 (USDC approval)
Complete Phase 1: Approve USDC spending
Complete Phase 2: Lock position transaction
That's it! No CLI required, no coordination with the principal miner needed for the lock process.
Alternative: Via Shared URL (Optional)
If the principal miner provides a pre-filled lock URL:
Click the URL (format:
https://cartha.finance/lock?phase=1&...)Connect your wallet
Verify the parameters match your agreement
Complete Phase 1: Approve USDC
Complete Phase 2: Lock position
How It Works
System Architecture
Smart Contract Protection
Your position is secured on-chain:
What You Control:
Position ownership (via your EVM wallet)
Capital withdrawal after lock expiry
No principal miner approval needed to withdraw
Independent locking (no CLI or miner coordination required)
What You Don't Control:
ALPHA emissions (sent to principal miner's Bittensor wallet)
Pool performance (managed by principal miner)
Liquidation events (market-driven from DEX activity)
Understanding the Agreement
What to Negotiate
Before locking, establish clear terms with the principal miner:
Profit Split:
What percentage of TAO emissions do you receive?
Is it pro-rata based on capital contribution?
Are there any performance fees?
Distribution:
How often will you receive distributions?
What's the distribution method? (TAO transfer, stablecoin, etc.)
Minimum distribution threshold?
Lock Terms:
Preferred pool selection (BTCUSD, ETHUSD, etc.)
Lock duration (longer = higher subnet score)
Renewal terms after expiry
Communication:
How will the principal miner report performance?
What's the contact method? (Discord, Telegram, email)
Response time expectations?
Sample Agreement Template
Managing Your Position
Viewing Your Positions
Via Lock UI:
Visit https://cartha.finance/manage
Connect your EVM wallet
View all positions, amounts, and expiry dates
Via Block Explorer:
Visit https://basescan.org (or https://sepolia.basescan.org for testnet)
Enter your wallet address
View vault contract interactions
Position Actions
Top-Up (Add More USDC):
Visit https://cartha.finance/manage
Click "Top Up" on your position
Add more USDC to increase your share
No approval from principal miner needed
Extend Lock:
Visit https://cartha.finance/manage
Click "Extend" on your position
Extend lock duration for higher subnet score
Improves your emission share
Withdraw After Expiry:
Wait for lock period to end
Visit https://cartha.finance/manage
Click "Withdraw" on expired position
Receive your principal back (minus any liquidation losses)
Risks & Protections
What You're Protected From
✅ Principal Theft
Your USDC is in a smart contract, not the principal miner's wallet
Principal miner cannot withdraw your funds
You control withdrawal via your EVM wallet
✅ Forced Lock Extension
Principal miner cannot extend your lock
Position automatically expires per your chosen duration
✅ Arbitrary Terms Changes
Original lock terms are immutable on-chain
Any changes require a new lock position
What You're NOT Protected From
⚠️ Emission Non-Payment
If principal miner doesn't distribute TAO, Cartha doesn't enforce it
You must rely on legal agreements or reputation
⚠️ Liquidation Losses
LP positions can be liquidated in volatile markets
Capital loss is permanent (not reimbursed)
This is inherent to liquidity provision
⚠️ Poor Performance
Principal miner's pool strategy may underperform
Low trading volume = lower fee earnings
Bad subnet score = lower emissions
⚠️ Smart Contract Risks
Bugs in vault contracts (unlikely but possible)
EVM chain risks (Base network downtime, reorgs)
Risk Mitigation Strategies
1. Start Small
Lock minimum amount first (100k USDC)
Test the principal miner's distribution
Scale up after successful payouts
2. Diversify
Don't lock 100% with one principal miner
Use multiple managers with different strategies
Split across different pools
3. Due Diligence
Research principal miner's history
Check their communication and transparency
Ask for references from other federated miners
Verify their Bittensor wallet address
4. Legal Protection
Use written agreements
Consider escrow services for large amounts
Know your jurisdiction's investor protections
5. Monitor Regularly
Track your position via Lock UI
Monitor principal miner's performance
Watch for liquidation events
Stay informed about pool health
Economics & Returns
Return Components
1. Trading Fees (60% to LPs)
Proportional to your locked USDC
Based on pool trading volume
Paid continuously in USDC (stays in vault)
2. TAO Emissions
Based on total pool capital (you + others under same hotkey)
Based on lock duration
Based on principal miner's subnet score
Paid to principal miner's Bittensor wallet
You receive your share per agreement
Expected Returns
These are estimates - actual returns vary
Conservative Scenario:
100,000 USDC for 6 months
Moderate pool activity
70% profit share with principal miner
Estimated: 5-10% APY
Moderate Scenario:
250,000 USDC for 1 year
Active pool with good principal miner
75% profit share
Estimated: 10-20% APY
Optimistic Scenario:
500,000+ USDC for 2 years
Top-performing principal miner
80% profit share
Estimated: 20-35% APY
Risk Scenario:
Liquidation event: -10% to -50% capital loss
Poor principal miner: Delayed/no distributions
Low activity pool: <5% APY
Example Payout Calculation
Your Position:
200,000 USDC locked
12-month lock period
BTCUSD pool
Principal Miner's Pool:
Your capital: 200,000 USDC
Other federated miners: 600,000 USDC
Principal's own capital: 200,000 USDC
Total: 1,000,000 USDC
Annual Emissions: 100,000 TAO
Profit Split (75% to federated miners, 25% to principal):
Total to federated miners: 75,000 TAO
Your share (20% of pool): 15,000 TAO
Principal miner's management fee: 25,000 TAO
Trading Fees (Separate):
Pool earns 50,000 USDC in fees
Your share (20%): 10,000 USDC
Total Returns:
15,000 TAO (distributed by principal miner)
10,000 USDC (in vault, claimed at withdrawal)
Estimated APY: ~20-30% (depends on TAO price)
Finding Principal Miners
Where to Look
Community Channels:
Discord: https://discord.gg/7DXG57B6
Telegram groups
Twitter/X announcements
Leaderboard:
Visit https://cartha.finance/leaderboard
View top-performing miners
Check their total locked capital
Reach out to discuss terms
Direct Outreach:
Post in community channels
Specify your capital amount and lock duration
Compare offers from multiple principal miners
Red Flags
⛔ Avoid Principal Miners Who:
Promise guaranteed returns
Request capital outside of Cartha vaults
Refuse to provide written agreements
Don't disclose their Bittensor wallet address
Have no track record or references
Pressure you to lock immediately
Offer terms that seem too good to be true
Green Flags
✅ Look for Principal Miners Who:
Provide transparent performance reporting
Have satisfied federated miners (references)
Use clear written agreements
Respond promptly to questions
Disclose all risks upfront
Have consistent distribution history
Maintain active communication channels
Withdrawing Your Principal
When Can You Withdraw?
After your lock period expires:
Visit https://cartha.finance/manage
Connect your EVM wallet
Find your expired position
Click "Withdraw"
Confirm transaction in your wallet
What You Receive
Principal USDC:
Original lock amount
Minus any liquidation losses
Plus trading fees earned (if not distributed)
TAO Emissions:
Already distributed by principal miner
Not included in withdrawal (received separately)
Re-Locking
After withdrawal, you can:
Lock again with the same principal miner
Switch to a different principal miner
Exit entirely
Tips for Re-Locking:
Negotiate improved terms based on track record
Consider different pools for diversification
Adjust lock duration based on market outlook
Frequently Asked Questions
Can the principal miner steal my USDC?
No. Your USDC is locked in a Cartha vault smart contract, not the principal miner's wallet. Only you can withdraw via your EVM wallet after lock expiry.
What if the principal miner doesn't pay me?
Cartha doesn't enforce profit-sharing agreements. You must rely on legal agreements, reputation, or escrow. This is why due diligence is critical.
What happens if the pool gets liquidated?
Your capital is reduced by the liquidation loss. This is permanent and not reimbursed. LP risk is inherent to the system.
Can I withdraw before my lock expires?
No. Lock duration is enforced by smart contracts. Plan your lock period carefully.
How often will I receive distributions?
This depends on your agreement with the principal miner. Common schedules: weekly, monthly, or quarterly.
What if the principal miner stops operating?
Your principal is still safe in the vault. You can withdraw after expiry. However, emissions will stop if the miner de-registers.
Can I lock to multiple principal miners?
Yes! You can diversify across multiple principal miners with different pools and lock durations.
Is there a minimum lock amount?
Yes, 100,000 USDC is the minimum lock amount.
What are the gas fees?
Two transactions required:
Approve USDC (~$0.10-$1 in ETH)
Lock position (~$0.50-$5 in ETH)
Fees vary based on Base network congestion.
Getting Help
Resources
Principal Miners Guide - Understanding your manager
Lock UI Guide - How to use the interface
FAQ - Common questions
Risk Disclosure - Full risk information
Support
Discord: https://discord.gg/7DXG57B6
Website: https://cartha.finance
Email: [email protected]
Community
Join discussions with other federated miners:
Share experiences
Compare principal miner terms
Get recommendations
Report issues
Next Steps
Research: Learn about LP risks and Cartha mechanics
Find Principal Miners: Compare options and terms
Start Small: Lock minimum amount first
Monitor: Track performance and distributions
Scale: Increase capital after successful payouts
Disclaimer: Federated mining involves significant risks including potential capital loss from liquidations and reliance on principal miner distribution. Cartha provides infrastructure only and does not guarantee returns, enforce agreements, or assume responsibility for principal miner actions. Always do your own research and consult appropriate advisors.
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