Documentation Index
Fetch the complete documentation index at: https://docs.pelion.dev/llms.txt
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The treasury contract is not yet deployed. The operational policy below is the current v0.1 specification.
Structural components
The treasury spans two ecosystems and operates through three cooperating pieces.
Base-side treasury contract (PelionTreasury.sol). A Solidity contract on Base. Holds Pelion tokens (from allocation plus trading tax proceeds) and USDC. Receives inflows, authorizes buyback operations, holds the reserve for operational expenses. Governance-controlled.
Bittensor-side wallets. Self-custodied wallets on Bittensor. Hold TAO (working capital and staking), subnet alpha tokens (staked positions across active subnets), and validator bonds (for any Pelion validator hotkeys). Operated by the protocol, with actions authorized by governance.
Bridge accounts. Wallets on both Bittensor EVM and Base, used to move capital between ecosystems. USDC flows Base to Bittensor via Across or a CEX when the treasury needs to enter a TAO position. TAO → USDC flows the other direction when the treasury harvests alpha into buyback funding.
Inflows and outflows
Inflows. Trading tax from the Pelion token (in ETH or USDC, depending on the pair). Resolution fees from protocol usage (in USDC or Pelion token). Validator emissions on any Bittensor validator Pelion operates (in alpha). Staked alpha yield from subnet stake positions (in alpha). Over time, emissions-based income grows as the treasury’s staked alpha compounds.
Outflows. Operational expenses (engineering, infrastructure, AI API costs during v0 resolution). Market-based buyback of Pelion tokens, which are then burned. Strategic repositioning (selling one alpha position to enter another based on evolving subnet performance).
In the early phase, trading tax dominates inflows. Over time, Bittensor emissions are designed to dominate. This is the structural claim behind the tax auto-decay schedule. Once emissions fund the treasury, trading friction can reduce.
Buyback mechanics
The buyback process runs monthly. It is a four-step sequence executed transparently on-chain.
Step 1. Convert a fraction of alpha positions to TAO. Uses subnet AMMs to sell alpha for TAO. Orders are spread across subnets to minimize price impact on any one position.
Step 2. Convert TAO to USDC. Via Bittensor EVM bridge for small sizes, via CEX for larger sizes (CEX has better liquidity for TAO). The treasury does not keep significant uncovered TAO, it converts what it needs and leaves the rest staked.
Step 3. Market-buy Pelion token. On Aerodrome or the dominant Pelion DEX pair. TWAP execution over 24 to 48 hours to avoid MEV extraction and to smooth price impact.
Step 4. Burn the purchased tokens. Sent to a burn address onchain. Supply decreases.
The fraction harvested vs left to compound is a governance parameter. In the early growth phase, the protocol compounds more (alpha stake grows, emissions grow, flywheel accelerates). In the mature phase, the protocol harvests more (direct value return to holders via burn).
Transparency
Every treasury transaction is publicly logged with reasoning, in real time, on a public dashboard. No exceptions.
This includes. TAO purchases. Alpha stake decisions. Buyback execution windows and amounts. Operational expense reimbursements. Strategic repositioning moves.
Opaque treasury is a trust killer in this category. Pelion’s treasury operations are reviewable line-item by anyone with a browser. If a buyback looks suspicious, the public record shows when it was decided, who authorized it, and what price it executed at. If an alpha stake underperforms, the public record shows that too.
This is a requirement, not a nice-to-have. Protocols that operate opaque treasuries lose credibility the first time anything goes wrong. Pelion’s design commits to transparency upfront.
Relationship to token holders
Token holders benefit from treasury operations in two distinct ways that both scale with the treasury’s productive assets.
The tax auto-decay schedule reduces trading friction as Bittensor holdings grow. Holders trading in and out incur less friction over time.
Buyback and burn reduces supply. Holders’ proportional claim on future treasury activity grows as supply shrinks.
Both vectors are mechanical. They fire automatically as the treasury accumulates productive assets. They do not require governance intervention on a per-transaction basis, only high-level policy setting (harvest vs compound ratio, tax adjustment within bounds).
See Token mechanics for the holder-side story. See Governance for how the treasury’s policy parameters are set.