BIT Protocol

Bitcoin's security comes, at its root, from the hashrate that miners provide; and that hashrate comes, at its root, from miner revenue. Miner revenue has only two parts:

1. Block Subsidy: halves every four years, and will eventually reach zero.
2. Transaction Fee: dependent on on-chain activity and demand for block space.

This means that if the future relies on on-chain transfer fees alone, those fees cannot sustain a high enough network-wide hashrate, and Bitcoin's security will face a structural decline. This is the Security Budget Problem that the community has debated again and again.

There are only two ways to solve it:

1. Make Bitcoin block space generate enough fee demand, stable enough to count on;
2. Have some mechanism continuously "subsidize" miners and ecosystem contributors, channeling value back into Bitcoin's settlement layer.

TAP and DMT took a key step here, but they went only halfway.

In the field of Bitcoin-native assets, TAP and DMT together worked their way toward an asset that deserves to be taken seriously: NAT. It was a worthwhile attempt centered on Bitcoin's security budget. (TAP and DMT are protocols; NAT is the asset built with DMT.)

What makes NAT distinctive:

1. Its minting, transfer, and trading all happen on Bitcoin mainnet;
2. Every inscription and interaction contributes real transaction fee income to miners;
3. It has no team allocation, and its value is set entirely by the market;
4. It turned "using a native asset to give back to Bitcoin miners" from an idea into an on-chain, observable practice.

But to be frank, this attempt also exposed three structural limitations that deserve a serious look.

🚧 Limitation One: Rewards Point in Only One Direction — Coinbase Output

NAT channels all of its subsidy value to a single destination: the miners' Coinbase Output.

Miners matter, of course, but a protocol cannot prosper over the long run by feeding miners alone. It also needs a full set of ecosystem roles — developers, the community, public goods, AI Agents — supporting it together.

🚧 Limitation Two: Incentives in Practice Depend on "Whale Donations"

Ideally, NAT would deliver value continuously through protocol mechanics. In practice, the funds that keep the ecosystem running depend heavily on the community's voluntary donations.

When incentives are not written into the protocol layer, they fall back on personal favors and power relationships, and there is no fairness or sustainability to speak of.

🚧 Limitation Three: Mining Pools Take the Money but Build Nothing

NAT sends tokens straight to the miners' Coinbase Output, so a mining pool can receive tokens with zero participation and zero contribution, then sell them outright.

As the most important organizers of hashrate in the Bitcoin ecosystem, mining pools should be deep co-builders of the protocol. Under the NAT model, however, they are designed as purely passive beneficiaries, which is severely harmful to the protocol's long-term health.

This is precisely the question BIT Protocol set out to answer.

BIT Protocol is not another inscription protocol. It is a protocol layer whose first principle is to continuously subsidize Bitcoin's security budget and the growth of its ecosystem.

It forks TAP not to issue an asset all over again, but to take value distribution itself and upgrade it from "a single asset + a single outlet" into a protocol-level, multi-channel distribution system.

The relationship between the three can be understood this way:

If "Bitcoin-native" is the skeleton of BIT Protocol, then the Eight Buckets mechanism is its heart.

BIT Protocol redirects the path of value distribution at the protocol layer: every unit of subsidy produced flows, by rule, into the following eight buckets at the same time.

Eight Buckets = eight independent yet cooperating channels of value, together forming Bitcoin's security budget engine.

The Eight Buckets are BIT Protocol's structured thinking about Bitcoin's long-term ecosystem:

1. Guarding the base (1, 2): Caring for pool miners and solo miners alike, the goal is both hashrate security and hashrate decentralization;
2. Building the protocol together (3, 6): The node network and public infrastructure are built in parallel, so that whoever takes the money must also be a builder;
3. Honoring what came before (4): Cross-Token Tribute routes a share straight to a predecessor project's wallet — automatic, on-chain, no bridge needed;
4. Cultivating the ecosystem (5, 7): From DAOs to the community, the protocol's prosperity has people building it and people benefiting from it;
5. Reserving for the future (8): AI Agents are the next-generation economic actors on chain, and budget space is set aside for them in advance.

This is a distribution structure that faces "the past, the present, and the future" all at once.

Of all the buckets, Community Grants (the community-incentive bucket) is the one that most clearly shows the philosophical difference between BIT Protocol and NAT.

❌ The Old NAT Model

• Community growth depended on voluntary donations from a handful of whales;
• How much anyone gave came down entirely to personal will, with no rules, no commitments, and no oversight, which turned community contribution into a "loyalty ritual";
• The promoters and educators in the community put in real effort, yet had no protocol-level channel through which to be rewarded.

The result: incentives were highly arbitrary and unpredictable, and the best communities had no long-term motivation.

✅ BIT Protocol's Community Grants Model

1. For the protocol subsidy produced by every block, the protocol layer mandates that a portion be allocated into the Community Grants bucket;
2. Communities can submit proposals openly: what they have done, what they plan to do, and how many new users / new addresses / new trades they expect to bring in;
3. A community vote (combined with the BitNode node governance described in the next section) decides which community this money belongs to for the next 3 months;
4. The winning community keeps receiving the bucket's output over the following 3 months;
5. After 3 months, proposals are submitted again and votes are held again, forming a continuously rolling, healthy competition.

🔑 What Makes This Design Radical

1. It writes incentives into the protocol — the protocol itself becomes the biggest "backer," with rules that are public, transparent, and verifiable.
2. It ties community energy directly to block growth — as blocks keep producing, the subsidy keeps accumulating, so a community's effort is quantifiable and redeemable in real time.
3. It replaces handouts with competition — payouts no longer happen whenever a whale feels generous; a community wins by doing good work, which forms a flywheel.
4. It prevents power from concentrating and protects small communities — the 3-month rolling cycle keeps power from calcifying and gives emerging communities a real chance to turn things around.

If Community Grants solves "how the community stays continuously incentivized," then BitNode Fund solves the most overlooked other half of the NAT era:

Can mining pools turn from bystanders who "just take the money and sell the tokens" into genuine co-builders of the protocol?

❌ The Awkward Reality Under the NAT Model: Mining Pools Collect Full Rewards for Zero Participation

1. Rewards go straight to the Coinbase Output, and mining pools collect tokens without doing any protocol-level work;
2. Once they hold the tokens, the most rational move is to sell them right away, creating constant sell pressure;
3. Mining pools, the most organized force in the Bitcoin ecosystem, stay completely disconnected from protocol development;
4. Over time, the protocol becomes just an extra revenue line for the pools rather than a long-term venture they're committed to.

✅ How BIT Protocol Cracks This: BitNode Fund + Mandatory Node Constraints

BitNode Fund is Bucket No. 3 of the protocol, dedicated to supporting the protocol's decentralized infrastructure: the node network, the indexing system, DAO governance, and incentives. It has three key design points:

🔹 1. Mining Pools Must Deploy an ord-dmt-bit Node Before They Can Use Their Token Rewards

This is a hard rule BIT Protocol sets at the protocol layer: a mining pool can earn token rewards in the Coinbase Output, but to "move" that balance (transfer / sell / reallocate), it must first deploy and reliably run an ord-dmt-bit node.

This means:

• Mining pools can no longer act as pure ATMs: to get the money, build first;
• Mining pools already have servers, bandwidth, and operations teams, so the marginal cost of running an indexer node is minimal while the protocol value it delivers is enormous;
• Once a mining pool joins the node network, it automatically becomes part of the protocol's data availability, and the decentralization of indexing rises sharply;
• A mining pool's hashrate role, node role, and governance role are bound together at the protocol layer, which fundamentally prevents the imbalance of "strong hashrate but weak ecosystem."

🔹 2. Three Types of Participants Can Join the Node Network

BitNode Fund serves more than mining pools; it is open to three types of ecosystem participants:

Staking BIT becomes the protocol's core binding mechanism:

• Want to become a formal node → stake BIT;
• Want to take part in indexing-data validation → stake BIT;
• Want DAO voting rights (including votes on buckets like Community Grants) → stake BIT;
• Want a continuous revenue share from BitNode Fund → stake BIT.

BIT is therefore upgraded from a token into the protocol's work credential, governance credential, and yield credential.

🔹 3. The Node Network Is the Underlying Infrastructure for Eight Buckets Governance

BitNode nodes do far more than run data:

• They carry indexing: providing decentralized indexing services for all of BIT Protocol;
• They carry voting: votes for community buckets such as Community Grants and Project DAOs all run through BitNode nodes via off-chain signing with on-chain anchoring;
• They carry governance: major issues such as the Eight Buckets ratios, bucket rules, and protocol upgrades are all decided by BitNode node votes;
• They carry the future: future cross-chain bridges, AI Agent admission, and the introduction of new buckets will all rely on the consensus of the BitNode network.

🌟 What BitNode Fund Truly Means

It makes "mining BIT" and "building BIT" the same thing;
it makes "holding BIT" and "governing BIT" the same thing;
it makes "rewarding mining pools" and "binding mining pools" the same thing.

Using hard rules at the protocol layer, it stitches together three things that were once separate — hashrate, nodes, and governance — into a truly full-stack, co-built security budget layer protocol for Bitcoin.

The Eight Buckets are not eight isolated reservoirs. They form an interlinked economic network:

• Coinbase Output and Solo Coinbase Output buckets: secure hashrate and decentralize hashrate at the same time;
• BitNode Fund and Public Goods Fund: build node consensus and public infrastructure on two parallel tracks;
• BitNode Fund and Community Grants: nodes supply the voting infrastructure while the community bucket generates governance demand, each one a cause of the other;
• Project DAOs and Community Grants: project teams build products, the community builds users, activating the ecosystem flywheel from both sides;
• AI Agent Treasuries: in the future, AI Agents can act as independent economic actors that participate across all of the buckets above through application, voting, and matching, injecting automated economic vitality into the whole network;
• Cross-Token Tribute: routes value straight to a predecessor project's wallet — automatic, on-chain, no bridge needed — keeping the protocol tied to the projects it builds on.

Every block produced powers eight value channels at once, and every role in the ecosystem can find its place at the protocol layer.

1. 🧬 Protocol-level Bitcoin-native constraint: every asset action — minting, transfer, atomic swap, order placement, matching — must settle on Bitcoin mainnet.
2. 🎯 Improved fair mint (Fair Mint 2.0): carries forward the fair mint ethos of DMT, aiming for long-term, steady, sustainable on-chain activity.
3. 🔁 Atomic swap + BitDEX mainnet matching: each fill = one Bitcoin transaction = one miner fee + an allocation across the Eight Buckets.
4. 🧩 Reserved protocol upgrade path: the BitNode node system reserves interfaces for later extensions such as governance, cross-chain, and AI Agents.

🔐 Why must DMT-BIT only be operated in environments that "support BIT Protocol"?

Bitcoin inscription assets have one foundational property: an inscription is tightly bound to a specific UTXO. It is unique, cannot be copied, and cannot be rolled back.

This means your 1,000 DMT-BIT tokens are in fact a single inscription record bound to one specific UTXO. The moment that UTXO is spent, consolidated, sent as a change output, or split inside a wallet, tool, or marketplace that does not recognize BIT Protocol rules, the protocol layer judges that the inscription on that UTXO has moved to a non-compliant location and therefore reads the balance as zero. Since Bitcoin transactions are irreversible, this loss cannot be recovered.

✅ After the hard fork, DMT-BIT tokens recognize only BIT Protocol

Keep these four hard rules in mind:

Hard Rule 1: Trade only on BitDEX or officially recognized marketplaces

• BitDEX (the protocol's official DEX) is the default safe trading venue;
• Other third-party marketplaces should preferably be used only after they have been formally certified as "supporting BIT Protocol" through an official announcement;
• Any marketplace that has not been officially certified carries a risk of balance loss, even if it appears able to trade DMT-BIT.

Hard Rule 2: Do not "casually move" the UTXOs of a DMT-BIT address with an ordinary Bitcoin wallet

• Do not perform operations such as "consolidate UTXOs", "fee bump", "RBF replacement", or "change consolidation" on that address inside an ordinary BTC wallet;
• Do not send out a UTXO that carries an inscription as if it were ordinary BTC;
• To operate DMT-BIT, use a DEX marketplace that supports BIT Protocol.

Hard Rule 3: TAP tools ≠ BIT Protocol tools

• Certain TAP tools that worked before the hard fork may not be compatible with BIT Protocol rules after it;
• Until a tool has explicitly been upgraded to support BIT Protocol, do not use the old tool to operate DMT-BIT inscriptions;
• The list of upgraded tools is governed by the ongoing announcements at https://dmt-bit.com.

Hard Rule 4: New inscriptions must use "p": "bit", not "p": "tap"

• After the fork, the "p" field in the content of any newly created inscription must be set to "p": "bit" so it can be indexed correctly; an inscription still carrying "p": "tap" will not be picked up by the BIT Protocol indexer;
• "p": "tap" inscriptions that already existed before the fork stay compatible and continue to be indexed as before.

🚀 Fork Activation Height: Bitcoin Block 955,559

BIT Protocol will officially fork from the TAP protocol and activate at Bitcoin block height 955,559. This is a protocol-level hard anchor:

• Governed by block height: the exact activation moment depends on the pace of Bitcoin mainnet block production;
• Before 955,559: protocol rules remain compatible with the original TAP / DMT behavior, and any BIT asset claiming to activate early is a false claim;
• At and after block 955,559: the Eight Buckets allocation rules, BitNode node constraints, Mint, atomic-swap upgrade fields, and the rest take formal effect;
• The first block makes history: block 955,559 becomes the genesis anchor of BIT Protocol's protocol history.

⚠️ Launch Notes

1. Confirm the official entry points
   • Protocol website: https://dmt-bit.com
   • Exchange: https://www.bitdex.trade/
   • Treat every other link as a source of risk.
2. A fork is not an airdrop: BIT Protocol is a protocol-level fork. It will never ask you to enter a seed phrase to claim any forked coin. Any such request is a scam.
3. The Eight Buckets allocation rules are defined by the official source: the bucket allocation ratios, the Community Grants application rules, the BitNode staking and operating parameters, and so on follow the latest version published at dmt-bit.com and in the BitPaper.
4. Indexer transition period: in the early days of the fork, treat the official indexer (ord-dmt-bit) as authoritative. For the first few blocks after 955,559, display glitches are normal until third-party explorers add support, so do not retry operations or panic-migrate.

Phase One (from block 955,559): Close the Ecosystem Loop, Activate the Eight Buckets

• ✅ BIT Protocol formally fork-activated at Bitcoin block 955,559
• ✅ Official protocol website went live at the same time
• ✅ The BitDEX upgraded at the same time
• 🔄 The Eight Buckets allocation mechanism running in full

Phase Two: The BitNode Network and Decentralized Governance

• The BitNode node network rolls out across the board: mining pools, institutions, and individuals all take part;
• On-chain governance system: bucket parameters, proposal-submission rules, and cross-period adjustments are all decided by BitNode voting;
• Cross-chain bridge: supports interoperation between Bitcoin mainnet and networks such as ETH / BSC / SOL (asset mapping only; settlement stays anchored to Bitcoin mainnet).

Back to the original question: after the block subsidy reaches zero in 2140, who pays the miners?

BIT Protocol uses the Eight Buckets plus BitNode to push one step forward in a structured way: it not only subsidizes miners, it also binds mining pools as co-builders, writes the community into the protocol, and reserves a place in the future for AI Agents.

BIT Protocol's Eight Buckets, its N assets, its ongoing protocol-level distribution, and its requirement that mining pools build — together these form that "Bitcoin security budget power plant," driven by eight engines and guarded jointly by mining pools and the community.