Memo

TaoLend operates as a decentralized lending protocol where miners/users participate by lending TAO or depositing ALPHA collateral through a smart contract. Validators run a Bittensor neuron that periodically syncs with the blockchain, fetches pre-calculated weight allocations from a centralized API (https://api.taolend.io/v1/weights), and submits these weights on-chain every ~100 blocks. The validator checks registration, manages metagraph syncs, and handles weight setting with fallback logic (if API fails, sets UID 0 weight to 1.0).

Miners earn ALPHA rewards through daily distributions calculated off-chain based on their deposit and lending activity metrics. The system uses a dual-cap mechanism to limit daily distributions and includes anti-manipulation measures like historical balance sampling for deposits.

Daily ALPHA distribution (7,200 ALPHA) is split between deposit and lending rewards. Deposit rewards (20%) use historical balance sampling (minimum balance across 360-block intervals) to prevent gaming. Lending rewards (80%) are calculated from actual protocol fees (30% of interest) with a 1.5x multiplier: lending_alpha = min(allocatable × 0.80, (total_fees × 1.5) / alpha_price).

Individual lender rewards are proportional to their protocol fee share. A dual-cap mechanism limits allocatable ALPHA to the minimum of fixed pool cap and TAO emission cap. Validators fetch pre-calculated weights from the API and submit them on-chain every ~100 blocks (~1200 seconds).

Excess ALPHA after user allocations and gas fees is burned.