Principal Miners
Role: Registered Bittensor miners who accept external capital and act as investment managers for federated liquidity providers.
Also known as: Investment Managers, Pool Operators, Delegated Miners
Overview
Principal Miners are the bridge between traditional Bittensor mining and external capital markets. They maintain registered hotkeys on the Cartha subnet and can optionally accept capital from external investors (federated miners) to pool liquidity and scale their operations.
Two Operating Modes
1. Private Mode (Traditional)
Lock only your own capital
Manage your own USDC positions
Receive emissions directly to your Bittensor wallet
2. Public Mode (Investment Manager)
Accept capital from external investors (federated miners)
Pool multiple capital sources under your hotkey
Manage investment strategy and pool selection
Negotiate profit-sharing arrangements
Receive all emissions (must distribute to federated miners per agreement)
Requirements
Technical Requirements
✅ Registered Bittensor hotkey on Cartha subnet (SN35)
✅ Sufficient TAO for registration fees
✅ EVM wallet (MetaMask, Coinbase Wallet, etc.)
✅ USDC for initial liquidity position
✅ Base network ETH for gas fees
Operational Requirements
📊 Understanding of liquidity provision risks
🔐 Secure wallet management practices
📈 Ability to monitor positions and pool performance
💼 (Optional) Business structure for accepting external capital
How to Become a Principal Miner
Step 1: Register on Cartha Subnet
Testnet Registration:
Step 2: Create Your First Position
Minimum Requirements:
100,000 USDC minimum lock amount
1-1825 days lock duration (up to 5 years)
Step 3: Choose Your Operating Mode
Private Mode:
Lock only your own capital
No additional setup required
Receive 100% of your earned emissions
Public Mode (Investment Manager):
Share your hotkey with potential federated miners
Negotiate profit-sharing terms
Set up distribution mechanism
Monitor multiple positions under your hotkey
Accepting External Capital (Public Mode)
How Federated Miners Lock to You
Federated miners can lock capital to your hotkey in two ways:
Option 1: Via Cartha Lock UI ✅ Recommended
Federated miner visits https://cartha.finance/create-lock
Enters your hotkey address (SS58 format)
Selects pool, amount, and lock duration
Completes the lock transaction
Position is created under their EVM wallet
Option 2: Via CLI with Your Signature
You generate a lock URL using the CLI
Share the URL with the federated miner
They complete the transaction in the frontend
Position is created under their specified EVM address
Your Hotkey Address
Your federated miners will need your Bittensor hotkey address (SS58 format):
Starts with
5(e.g.,5GrwvaEF5zXb26Fz9rcQpDWS57CtERHpNehXCPcNoHGKutQY)48 characters long
Found in your wallet or via:
btcli wallet list
Smart Contract Architecture
All positions are tracked on-chain:
Each federated miner's position is independent
They own their position via their EVM wallet
Your hotkey is linked to all positions for emission tracking
Critical: Emissions flow to YOUR Bittensor wallet, not theirs
Emission Distribution
How Emissions Work
Important: YOU Control Distribution
✅ All TAO emissions go to your Bittensor wallet
✅ You are responsible for distributing to federated miners
✅ Cartha does NOT enforce profit-sharing agreements
✅ Distribution mechanism is entirely up to you
Distribution Strategies
Option 1: Manual Distribution
Track each federated miner's share
Send TAO periodically from your wallet
Simple but time-intensive
Option 2: Smart Contract Escrow
Create a custom distribution contract
Automatically split emissions based on capital contribution
Requires development work
Option 3: Off-Chain Agreement
Legal contract with federated miners
Manual accounting and distribution
Relies on trust and legal enforcement
Managing Multiple Positions
Position Tracking
Each position under your hotkey includes:
Federated miner's EVM address (position owner)
Pool selection (BTCUSD, ETHUSD, etc.)
Lock amount and duration
Expiration date
Viewing All Positions
Via CLI:
Via Frontend:
Visit https://cartha.finance/manage
Connect your EVM wallet
View all positions owned by you
Via Verifier API:
Total Locked Capital
Your subnet score is based on the sum of all positions under your hotkey:
Your own capital
All federated miner capital
Across all pools
Weighted by lock duration and amount
Profit Sharing & Agreements
Setting Terms
Before accepting external capital, establish clear terms:
Capital Contribution:
Minimum investment amount
Maximum pool size
Accepted lock durations
Profit Split:
What percentage of emissions goes to federated miners?
Is it pro-rata (based on capital contribution)?
Are there any performance fees?
Distribution Schedule:
Weekly, monthly, or quarterly distributions?
Minimum distribution threshold?
What happens to unclaimed distributions?
Risk Disclosure:
LP liquidation risks
Impermanent loss risks
Smart contract risks
Your own operational risks
Recommended Agreement Structure
Security & Best Practices
Protecting Your Hotkey
🔐 Never share your private keys
🔐 Only share your public hotkey address (SS58)
🔐 Use hardware wallets for large capital amounts
🔐 Keep your Bittensor coldkey offline
Monitoring Positions
📊 Check miner status regularly via CLI
📊 Track emission receipts to your Bittensor wallet
📊 Monitor federated miner position expirations
📊 Watch for liquidation events in pools
Communication with Federated Miners
📢 Maintain a communication channel (Discord, Telegram, email)
📢 Provide regular performance updates
📢 Alert federated miners to upcoming expirations
📢 Transparent emission reporting
Risk Management
⚠️ Diversify across multiple pools
⚠️ Don't over-leverage with borrowed capital
⚠️ Understand liquidation triggers
⚠️ Keep emergency reserves for distributions
Risks & Considerations
Operational Risks
Emission Distribution Responsibility:
You must manually distribute emissions
No automatic enforcement of agreements
Legal/reputational risk if you don't pay
Performance Risk:
Poor pool performance = lower emissions
Liquidation events affect your subnet score
Federated miners may not re-lock if performance is poor
Regulatory Risk:
Accepting external capital may trigger securities regulations
Consult legal counsel before operating as an investment manager
Know your jurisdiction's requirements
Technical Risks
Smart Contract Risk:
Vault contract bugs (audited but not risk-free)
EVM chain risks (Base network)
Liquidation Risk:
LP positions can be liquidated
Capital loss is permanent (not reimbursed by Cartha)
Affects your score and federated miner returns
Impermanent Loss:
Liquidity provision inherently has IL risk
Volatile markets increase IL
May offset TAO emissions
Earnings & Economics
Revenue Sources
1. Trading Fees (60% share)
Distributed proportionally to all LPs
Based on your pool selection
Paid in USDC
2. ALPHA Emissions
Based on your total locked capital
Based on lock duration (longer = higher weight)
Based on subnet performance score
Paid in TAO
Expected Returns
Note: These are estimates and not guarantees
Baseline Scenario:
100,000 USDC locked for 1 year
BTCUSD pool (moderate activity)
Estimated: 5-15% APY from fees + emissions
Optimistic Scenario:
500,000+ USDC locked for 2+ years
Multiple pools with high trading volume
Top-performing miner
Estimated: 15-30%+ APY
Risk Scenario:
Liquidation event: -10% to -50% capital loss
Poor subnet score: Minimal emissions
Low trading volume: <5% APY
Example Economics (Federated Pool)
Setup:
Principal Miner: 200,000 USDC locked
Federated Miners: 800,000 USDC locked
Total Pool: 1,000,000 USDC
Profit Split: 80% to federated miners, 20% to principal miner
Annual Emissions Received: 100,000 TAO
Distribution:
Federated Miners: 80,000 TAO (split pro-rata by capital)
Principal Miner: 20,000 TAO (management fee)
Principal Miner Benefits:
Emission share for 200k capital: ~20,000 TAO (10% of pool)
Management fee on 800k external capital: ~16,000 TAO (2% of total emissions)
Total: 36,000 TAO (36% of emissions with only 20% of capital)
Getting Help
Resources
Miner Guide - Complete setup instructions
Cartha CLI Documentation - Command reference
Federated Miner Flow - Technical architecture
FAQ - Common questions
Community & Support
Discord: https://discord.gg/7DXG57B6
Telegram: [Cartha Miners Group]
Email: [email protected]
For Federated Miners
If you're an external investor looking to lock capital through a principal miner:
Federated Miners Guide - How to participate
Lock UI: https://cartha.finance/create-lock
Risk Disclosure: Always review terms with the principal miner
Next Steps
Get Started: Register your hotkey and create your first position
Monitor Performance: Track your emissions and pool performance
Build Reputation: Provide consistent returns and transparent reporting
Scale Capital: Once established, consider accepting external capital
Optimize Strategy: Diversify across pools and adjust lock durations
Disclaimer: Principal miners are independent operators. Cartha provides the infrastructure but does not guarantee returns, enforce profit-sharing agreements, or assume responsibility for principal miner actions. All participants should conduct their own due diligence and consult appropriate advisors.
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