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Yuma has published a detailed analysis of Bittensor's proposed "Root Reborn" upgrade, arguing that the proposal introduces significant risks that outweigh its potential benefits in its current form.
While supporters argue the proposal's implementation would reduce subnet token sell pressure and create a more efficient capital allocation system, Yuma says the proposal introduces new incentive, regulatory, and structural risks that have not yet been adequately addressed.
What Is Root Reborn?
Today, root staking functions as Bittensor's primary staking layer. Root validators earn dividends generated from subnet activity, but those rewards are automatically converted into TAO before reaching stakers.
Root Reborn would replace that mechanism with validator-directed reinvestment.
Bart Hillerich
Instead of receiving newly distributed TAO, root stakers would accumulate an escrow balance backed by a basket of subnet tokens determined by the validator they choose to stake with. Validators would set allocation weights across subnets, and rewards would be continuously reinvested according to those allocations.
According to supporters, the change would transform root from a passive distribution mechanism into an active capital allocation layer while replacing ongoing subnet sell pressure with continuous reinvestment.
Yuma's Main Concerns
In its executive summary, Yuma stated that it does not support the proposal in its current form.
"Our POV: In its current form, the Root Reborn proposal carries substantial unmitigated risk that outweighs its benefits."
The company noted that it participated in preliminary discussions around the concept but emphasized that it has "never supported it in its current form" and has not provided any assessment regarding potential legal or regulatory implications.
The report identifies three primary areas of concern: moral hazard, regulatory exposure, and structural fragility.
Moral Hazard and Validator Incentives
A central theme throughout the analysis is the concern that Root Reborn would significantly expand validator influence over capital allocation.
Under the proposed design, validators would decide how rewards are distributed across subnet markets, creating the possibility that validators direct capital toward subnets in which they have a personal financial interest.
Yuma argues that the economic incentives may not always align with the interests of stakers.
"The design assumes yield-driven validator selection punishes bad picks; however, it is conceivable that it would be more lucrative for a validator to direct flow into a subnet they hold than to attract marginal stake through yield performance."
The report also raises the possibility of off-chain arrangements between validators and subnet operators, while noting that many validators already have direct relationships with subnet teams or operate subnets themselves.
Yuma further argues that validator performance may become difficult to evaluate over time because validators cannot control when stakers enter or exit their baskets, potentially making it harder for allocation decisions to meaningfully influence long-term returns.
Regulatory and Structural Risks
Beyond incentive concerns, the report highlights several technical and regulatory risks.
One of the most significant arguments is that validators would no longer be acting solely as neutral network participants.
"Validators are no longer simply providing a neutral technological service due to the requirement to also set weights for subnet token rewards, increasing regulatory risk."
The analysis also points to several structural concerns, including escrow balances being concentrated within a single coldkey, the possibility of redemption-driven liquidity events during periods of market stress, and the additional slippage introduced by repeated swaps between subnet tokens and TAO.
Yuma describes the proposal's redemption mechanics as a potential "bank run" scenario during periods of elevated withdrawals, arguing that later redeemers could face materially worse outcomes than earlier participants.
The report additionally warns that chain-level execution requirements could become increasingly difficult to manage as the network scales and the number of subnets grows.
Calls for Process and Testing
While the report critiques the proposal itself, Yuma also used the opportunity to call for a more formalized process around major protocol upgrades.
The company recommends extensive testing before deployment and advocates for clearer communication around upcoming chain changes.
Following publication of the analysis, Yuma stated that the report was largely a response to uncertainty surrounding the proposal's development timeline.
"The following analysis is a byproduct of lack of process within the ecosystem that leaves business builders limited notice or ability to properly plan, assess risk, and execute."
Yuma added that it would like to see a structured release process, greater opportunities for industry feedback, and clearer roadmaps for future chain upgrades.
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