BIT-0004: Subnet Deregistration

bits/BIT-0004-subnet-deregistration.md

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+# BIT-0004: Subnet Deregistration
+
+- **BIT Number:** 0004
+- **Title:** Subnet Deregistration
+- **Author(s):** John Spiigot, Greg Zaitsev
+- **Discussions-to:** https://discord.com/channels/1120750674595024897/1346557046761324545
+- **Status:** Final
+- **Type:** Core
+- **Created:** 2025-08-12
+- **Updated:** 2026-04-13
+
+## 🔍 Abstract
+
+This BIT proposes reenabling of subnet deregistration.
+
+## 🔧 Motivation
+
+Since the DTAO launch, the non-functional subnets keep consuming emissions, as well as chain footprint and compute resources. The existing subnet deregistration (`dissolve_network` / `remove_network`) is no longer working correctly and is disabled.
+
+## 🧪 Specification
+
+### Subnet Pruning
+
+Triggered when `SubnetLimit` is reached and a new subnet registration is attempted:
+- **Step 1:** Exclude subnets still within `NetworkImmunityPeriod`
+- **Step 2:** Among the rest, find the subnet with the lowest moving alpha price
+- **Step 3:** If multiple share the same price, pick the one with the earliest registration timestamp
+
+### Network Dissolution 
+
+In `do_dissolve_network`, perform full DTAO cleanup in the following order:
+1. Finalize all pending root dividends for the subnet
+2. Dissolve all user liquidity provider positions and clear protocol liquidity
+3. Distribute remaining subnet TAO pool to all stakers (α-in and α-out) pro-rata by alpha value, credited directly to coldkey free balances
+4. Destroy all α-in and α-out stakes and share pool state
+5. For legacy subnets (registered before `NetworkRegistrationStartBlock`): adjust the owner's returned lock cost by subtracting the portion of total emissions the owner received (`owner_received_emission = alpha_issuance * subnet_owner_cut * current_price`), so the final refund is `max(0, lock_cost - owner_received_emission)`. New subnets receive no lock refund.
+6. Purge on-chain commitments for the subnet
+7. Remove all network storage (parameters, neuron state, AMM data, mechanism config, etc.)
+
+Both `dissolve_network` and `root_dissolve_network` extrinsics maintain root-only access.
+
+### Explicit Subnet Limit
+Add new sudo hyperparameter `SubnetLimit` starting at `128`.
+
+### High-Level Flow
+
+```mermaid
+flowchart TD
+    A[New Registration] --> B{Check Subnet Limit?}
+    B -->|No| C[Register New Subnet]
+
+    B -->|Yes| E[Prune a Subnet]
+    E --> F[Deregister]
+    F --> G[Register New Subnet]
+
+    H[Deregistration] --> I[Dissolve LP Positions]
+    I --> J[Distribute TAO to Stakers]
+    J --> K[Destroy α-in/out]
+    K --> L[Refund Legacy Owner Lock]
+    L --> M[Remove Network]
+```
+
+## © Copyright
+
+This document is licensed under [The Unlicense](https://unlicense.org/).