Decentralized Long-Only Spot Margin Protocol for the Bittensor Network
Tenexium operates as a spot margin protocol within the Bittensor ecosystem, serving as the core infrastructure for the Tenex subnet. The protocol enables users to establish leveraged long positions on subnet tokens using TAO as collateral, while providing TAO liquidity providers with sustainable yields through both Bittensor miner emissions and protocol-generated fees from trading, borrowing, and liquidations.
- TAO-Only Liquidity Pool: Liquidity providers supply TAO exclusively, earning both miner emissions and protocol fee shares without direct alpha volatility exposure
- Long-Only Design: Deliberately prohibits short positions to prevent artificial sell pressure in dTAO markets
- Tiered Leverage System: Maximum leverage (up to 10×) determined by Tenex alpha token holdings with on-chain enforcement
- Dynamic Fee Structure: Trading and borrowing fees adjust based on utilization rates with tier-based discounts
- Automated Buyback Program: A defined share of protocol fees fund programmatic buybacks to support Tenex alpha token demand
- Circuit Breaker Protection: Multiple safety mechanisms including rate limiting, utilization caps, and emergency controls
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Liquidity Providers deposit TAO into the protocol and earn:
- Bittensor miner emissions
- Share of trading, borrowing, and liquidation fees
-
Traders can:
- Deposit TAO as collateral
- Borrow additional TAO against their position
- Execute leveraged long positions on alpha tokens
- Benefit from tier-based fee discounts and higher leverage limits
-
Protocol automatically:
- Maintains TAO liquidity for sustainable borrowing
- Manages liquidations and risk parameters
- Routes fees to buyback pool for Tenex alpha support
contracts/
├── core/
│ ├── TenexiumProtocol.sol # Main protocol contract
│ ├── TenexiumStorage.sol # Persistent state storage
│ └── TenexiumEvents.sol # Event definitions
├── modules/
│ ├── PositionManager.sol # Position lifecycle management
│ ├── LiquidityManager.sol # LP operations & rewards
│ ├── FeeManager.sol # Fee collection & distribution
│ ├── BuybackManager.sol # Automated buybacks → burn
│ ├── LiquidationManager.sol # Liquidation manager
│ ├── InsuranceManager.sol # LP loss insurance manager
│ ├── SubnetManager.sol # EVM validator manager
│ └── PrecompileAdapter.sol # Bittensor precompile adapter
├── interfaces/
│ ├── IAlpha.sol # Alpha token interface
│ ├── IStaking.sol # Staking interface
│ ├── INeuron.sol # Neuron interface
│ ├── IMetagraph.sol # Metagraph interface
│ ├── ICrowdloan.sol # Crowdloan interface
│ ├── IInsuranceManager # Insurance interface
│ └── IAddressConversion # Address conversion interface
├── libraries/
│ ├── AlphaMath.sol # Mathematical operations for alpha calculations
│ ├── AddressConversion.sol # H160 → SS58 address conversion
│ └── TenexiumErrors.sol # Custom error definitions
└── governance/
└── MultiSigWallet.sol # Multisig governance
- UUPS Upgradeable: Proxy pattern for seamless contract upgrades
- Modular Architecture: Separated concerns for maintainability and security
- Bittensor Integration: Native integration with Bittensor precompiles for staking and other operations
- Multi-Role Access: Owner, LPs, traders, and liquidators with appropriate permissions
- User deposits TAO collateral
- Protocol validates tier and leverage limits
- User borrows additional TAO (up to leverage limit)
- Protocol executes alpha token purchase on behalf of user
- Position is recorded with health ratio monitoring
Health Ratio = (Collateral Value + Alpha Position Value) / Borrowed TAO Value
- Maintenance Margin: 110% by default (positions are liquidated below this threshold)
- Liquidation Penalty: Additional 2% fee on liquidated collateral
- Utilization Cap: Borrowing disabled when utilization > 90%
- Rate Limiting: LP operations limited to prevent flash attacks
- Emergency Pause: Owner can pause all operations in extreme scenarios
- Health ratio < 110% (default)
- Position becomes underwater due to price movements
- Automatic execution by liquidator bots
- Liquidator identifies underwater position
- Protocol validates liquidation conditions
- Liquidator receives 60% of liquidation fee
- Remaining collateral returned to user (minus fees)
- Borrowed TAO returned to liquidity pool
- Fee Share: 60% of liquidation penalty
- Reward Pool: Separate reward mechanism for active liquidators
- Any address can act as a liquidator
- No whitelisting or special permissions required
- Multiple liquidators can compete on the same position
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Monitor Positions
- Monitor health ratios for all open positions, calculated from on-chain data
- Identify positions that have fallen below the required health threshold
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Submit Liquidation Transactions
- Call the liquidation function with the target position
- The protocol verifies that the position has been liquidatable for at least 5 consecutive blocks
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Receive Rewards
- On a successful liquidation:
- The liquidator receives their share of the liquidation fee
- The protocol automatically routes repaid TAO back to the pool
- Any remaining collateral goes back to the borrower
- On a successful liquidation:
- Gas Risk: Failed liquidation attempts still consume gas
- Competition: Other bots may attempt to liquidate the same positions
- Pricing Risk: Liquidatability depends on the on-chain valuation of a position at execution time
- Config Changes: Liquidation thresholds, fees, and rewards can be updated via governance
Note: If you’re running liquidation bots, you should be comfortable reading the contracts, working directly with on-chain data, and handling edge cases around pricing, gas, and reverts. Always review the code yourself before deploying real capital.
- Base Rate: 0.3% per trade (tier-discounted)
- Payment: Deducted from acquired alpha tokens
- Timing: Applied immediately on position open/close
- Base Rate: 0.003% per 360 blocks (dynamic based on utilization)
- Utilization-Kinked Model:
- Kink Point: 80% utilization
- Below Kink (0-80%): Gradual increase from base rate to 0.012% per 360 blocks
- Above Kink (80%+): Steeper increase from 0.012% to maximum rates
- Payment: Settled when position is closed or liquidated
- Timing: Accrued continuously in real-time, calculated on position updates or closure
- Rate: 2% fixed (paid by liquidated position)
- Payment: Distributed to liquidators and protocol
- Timing: Applied immediately upon liquidation execution
| Fee Type | Liquidity Providers | Liquidators | Protocol |
|---|---|---|---|
| Trading | 65% | 0% | 35% |
| Borrowing | 70% | 0% | 30% |
| Liquidation | 0% | 60% | 40% |
Eligible Tenex alpha holders receive tier-based fee discounts and higher maximum leverage limits.
| Tier | Token Threshold | Max Leverage | Fee Discount |
|---|---|---|---|
| 0 | 0 | 2× | 0% |
| 1 | 100 | 3× | 10% |
| 2 | 1,000 | 4× | 20% |
| 3 | 2,000 | 5× | 30% |
| 4 | 5,000 | 7× | 40% |
| 5 | 10,000 | 10× | 50% |
Note: Maximum leverage is enforced at position open and cannot exceed the user's tier cap.
Crowdloans will be offered only occasionally, and early participants receive permanent benefits.
| Contributed TAO | Max Leverage | Fee Discount |
|---|---|---|
| 1 | 2× | 2% |
| 2 | 2× | 4% |
| 3 | 3× | 6% |
| 4 | 4× | 8% |
| 5 | 5× | 10% |
| 6 | 5× | 12% |
| 7 | 7× | 14% |
| 8 | 7× | 16% |
| 9 | 7× | 18% |
| 10 | 10× | 20% |
Note: Fee discounts are cumulative; they stack instead of replacing each other.
- 80% of total protocol revenue (comes from protocol fees)
- Execution Threshold: Buybacks trigger when buyback pool >
buybackExecutionThreshold - Burning: Purchased tokens are immediately 100% burned
- Backing Asset: 100% TAO collateral
- Yield Sources:
- Miner emissions
- Protocol fee share (65-70% of all fees)
- Impermanent loss protection (long-only design)
- Utility: Tier determination and fee discounts
- Demand Drivers:
- Automated buyback program
- Governance participation
- Future utility expansion
- LP Rewards: Allocated pro rata to TAO liquidity provided
- Liquidator Rewards: Performance-based with minimum activity thresholds
- Buyback Allocation: 80% of protocol fees directed to token purchases and burn
The Hashlock audit is complete.
Audit link: https://hashlock.com/audits/tenexium
- UUPS Upgradeable: Proxy pattern with secure upgrade mechanisms
- Access Control: Multi-role permissions with Ownable and custom modifiers
- Reentrancy Protection: OpenZeppelin ReentrancyGuard on all external functions
- Input Validation: Comprehensive parameter validation and bounds checking
- Circuit Breakers: Multiple emergency stop mechanisms
- Rate Limiting: Anti-flash attack protection on LP operations
- Slippage Controls: Maximum slippage limits on interactions
- Conservative Parameters: Initial deployment with conservative risk settings
Protocol upgrades and parameter changes are controlled by a multisig, not by a single key.
- The core contracts are owned by a multisig wallet.
- The multisig requires N-of-M approvals (e.g. 3 of 5 signers) before any action can execute.
- No single signer can upgrade logic or change parameters alone.
- Multisig actions have a 48-hour timelock.
- Approve contract upgrades / deployments.
- Update protocol config (fees, LTV thresholds, liquidation settings, etc.).
- Execute governance actions after the timelock expires.
- Bittensor Network Stability: Protocol operations depend on Bittensor network uptime and consensus
- Precompile Reliability: Price feeds and staking operations rely on Bittensor precompile functionality
- Liquidity Risk: Insufficient TAO liquidity could impact borrowing
- Volatility Risk: Extreme alpha price movements could trigger liquidations
Start here with the LP tutorial video: https://youtu.be/6ul8Rg0Jmv8?si=HKEttgxkDS7tuq-t
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Copy
.env.exampleto.envand edit the following variables:WEIGHT_UPDATE_INTERVAL_BLOCKS: number of blocks between weight updates (default=100)NETWORK: network name for Subtensor EVM (default=mainnet)NET_UID: subnet uid (default=67)ENDPOINT: subtensor endpoint to which you will connect (default=wss://entrypoint-finney.opentensor.ai:443)WALLET_PATH: path where your wallets are stored (default=~/.bittensor/wallets/)WALLET_NAME: name of your coldkey (default=tenex)WALLET_HOTKEY: name of your hotkey (default=validators)
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Start the validator process:
python3 validator.pyStart here with the trader tutorial video: https://www.youtube.com/watch?v=QhfVoJOWbOY&t=1s
Tenexium is licensed under the MIT License - see the LICENSE file for details.
Leveraged trading is risky and can exceed your initial investment. Tenexium is provided “as is” with no warranties. Do your own research, understand the risks, and comply with applicable laws in your jurisdiction.
Built with ❤️ by the Tenexium Team
