# Incentive Mechanism

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This documentation is not finalized. More information will be released for mainnet.
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## Subnets

In Hypertensor, the overall token emission is split across multiple subnets every epoch. To determine how much of the total emission each subnet receives, the protocol uses a weighting system based on **delegate stake**, **node count**, and **Overwatch weights**.

This ensures a free market where subnets with **more stake from delegators** supporting the subnet, **more nodes** connecting and contributing to a subnet, and **benchmarking** from Overwatch Nodes, receive a larger share of emissions—but dampened and normalized, to avoid centralization, and to increase fairness and opportunity.

**Each subnet gets a weight on each epoch based on 3 factors**:

* Delegate stake weight
* Nodes count
* Overwatch weights

### Delegate Stake Weight

One factor in a subnet's weight is the **amount of stake delegated to it** by users. 

$$
\text{dstake weight} = \left( \frac{delegate:stake}{total:delegate:stake}\right)
$$

### Node Count Weight

Another factor is how many nodes are participating in a subnet. Node count weight matters because it’s a proxy for how much interest, usefulness, and security a subnet brings to the network.

$$
\text{node count weight} = \left( \frac{node:count}{total:node:count}\right)
$$

### Overwatch Weight

The resulting weight from Overwatch Nodes is applied to each of the weight factors above, delegates stake weight, and node count weight.

$$
\text{subnet weight} = dstake:weight \* node:count:weight
$$

The relationship between stake and rewards is **not linear**. Instead, each subnet's resulting weight is passed through a **tunable power curve**.

**This means**

* Subnets with more stake get **more rewards**
* But the increase is **not 1-to-1**—the curve **slightly flattens** the difference
* This helps prevent large subnets from dominating all emissions, and gives smaller or newer subnets a fairer share

**The power curve looks like this**

$$
\text{subnet weight} = (subnet:weight) ^p
$$

After weights are calculated for all subnets, they're **normalized** so that they sum to 100%. This gives each subnet a **final emission share**—its percentage of the total tokens emitted that epoch.

#### Why This Works

* Subnets are rewarded based on how much the community supports them through delegation, contribution, and benchmarking.
* The curve ensures no single subnet can dominate the network just by having more weight on any of the factors.
* This creates a healthier, more diverse ecosystem where smaller subnets can still thrive and grow.
* Fresh subnets will receive a premium of their weight-to-emissions ratio because the power curve distributes rewards.

***

## Subnet Nodes

### Consensus Mechanism

> Refer to node [classifications](https://docs.hypertensor.org/network/subnet-node/classifications) to understand how a node is created, its lifecycle, and becomes eligible for rewards.

The Hypertensor's on-chain subnet consensus mechanism is based on the **attestation-based consensus mechanism**.

Each **subnet** defines its own **incentive mechanism**, where nodes perform work and **score each other** based on the quality or utility of their output. Nodes in the subnet interact **peer-to-peer** and produce **output scores** reflecting how useful or correct each other's contributions are. These scores are **submitted as weights**—essentially reputation scores—where:

* Elected validator node submits a vector of weights for all nodes.
* The weights reflect how much trust, usefulness, or performance one node attributes to others.

These weights form a **decentralized reputation mesh**, unique to the purpose and rules of the subnet.

Once these weights are submitted, other validator nodes (non-elected validators) can **begin to attest** to the submitted consensus data. The validator **must receive a 66% attestation ratio** to have rewards emitted to the subnet; otherwise, the subnet and the elected validator node will accrue penalties, incentives are skipped, and the **validator will be slashed**.

### Rewarding Nodes

These weights are used to determine how rewards are distributed to each participating node in the subnet.

At the end of every epoch, Hypertensor uses the **finalized weight vector** (proposed by the elected validator and attested by others) to distribute **token emissions** to the participating subnet nodes.

Each node is rewarded based on its final weight relative to the **sum of all weights in the subnet** for that epoch. In other words, the more highly a node is scored by its peers, the larger its share of the total reward pool.

***

## Overwatch Nodes

Coming soon.