TEP-5: Subnet Governance and Operation

Abstract

This proposal outlines the operational, economic, and governance requirements for subnets within the Timeleap Network. While TEP-4 introduced the architectural model for subnets, TEP-5 defines the standardized framework for subnet onboarding, staking tiers, restaking behavior, revenue sharing, operational lifecycles, and slashing conditions. It ensures all subnets comply with Timeleap's federated governance, maintain uptime and reputation, and contribute fairly to the sustainability and growth of the network. The framework introduced in this TEP will serve as the foundation for future automation of subnet discovery, reputation, and compliance tooling.

Motivation

As the Timeleap Network scales, it is critical to define a predictable, fair, and enforceable governance model that governs the lifecycle and behavior of all subnets. Without clear economic alignment and operational standards, the network risks fragmentation, regulatory ambiguity, or degraded performance. TEP-5 addresses this by:

• Creating an explicit tiered staking and fee structure tied to subnet maturity and revenue.
• Defining minimum operational periods, lock reset behavior, and restaking rules to ensure stability and long-term commitment.
• Introducing compliance enforcement and slashing to protect the network from malicious or negligent actors.
• Preparing the groundwork for a reputation-based subnet scoring system, enabling discoverability and trust in a decentralized ecosystem.

This ensures that every subnet not only benefits from the Timeleap Network but also meaningfully contributes to its integrity, sustainability, and collective growth.

Specification

This section defines the operational rules and economic framework for all subnets participating in the Timeleap Network. It outlines staking requirements, revenue-sharing obligations, lifecycle behavior, and enforcement mechanisms. These parameters ensure that every subnet contributes to the integrity, sustainability, and unified governance of the network, while retaining the flexibility to operate independently under the federated model introduced in TEP-4.

Staking Requirements

The minimum required stake for subnets is $25,000 USD worth of KNS tokens. Subnets are required to stake KNS tokens for a minimum of 6 months. The minimum stake is required to be locked for the entire duration of the operational period.

Revenue Cap

Subnets are subject to a monthly revenue cap tied to their staked amount. Specifically, a subnet cannot earn more than the equivalent value of its staked KNS tokens per month. For example, if a subnet has staked $25,000 USD worth of KNS, it can earn a maximum of $25,000 USD in revenue per month.

This mechanism is critical to prevent potential abuse. Without such a limit, a subnet could, for instance, stake $25,000, rapidly generate $100,000 in revenue, and then abandon its stake and obligations—leaving users and the network exposed to risks and unresolved issues.

Additional considerations:

• Subnets can increase their stake at any time to raise their monthly earning cap.
• Any revenue earned above the cap will be redirected to the Timeleap Network treasury.
• Exceptions to this rule may be granted based on negotiated contractual terms, allowing for flexibility in special cases.

Staking Period

The staking period for subnets is as follows:

• Minimum Stake Period : Subnets must commit to a minimum staking duration of 6 months' worth of KNS tokens to be eligible for launch.
• Operational and Waiting Period : A subnet can operate for up to N - 3 months, where N is the total number of months it has committed to staking KNS tokens. The final 3 months constitute a mandatory waiting period designed to allow time for any potential user complaints, disputes, or operational issues to be reported and resolved. This ensures that users have sufficient opportunity to raise concerns regarding the subnet activities during its last days of operation before the subnet stake is released.
• Restaking and Lock Reset : Subnets can increase their stake at any time. However, when they restake, the entire stake lock period resets. For example, if a subnet has 2 months remaining on a 6-month lock and adds new tokens with a new 6-month term, the entire stake — old and new — will now unlock in 6 months from the restake.

Slashing and Governance

All subnets operate under the governance rules set by the Timeleap Network. These rules are informed by community feedback and enforced by the core protocol.

• Governance Compliance : Subnets must adhere to the Timeleap Network terms of service and governance policies at all times. Failure to comply may result in penalties or decommissioning.
• Critical Misconduct : In cases of grave faults or serious violations such as fraudulent behavior, malicious activity, or breaches of the terms of service, the subnet is immediately decommissioned, and the entire staked amount is forfeited to the Timeleap Network treasury.
• Minor Misconduct : For less severe misbehavior, subnets may incur a fine and lose reputation. A future Timeleap Enhancement Proposal (TEP) will define the precise penalties, including the amount of reputation deducted and the fine imposed per violation. All fines are paid directly to the Timeleap Network treasury.

Service Fees

Subnets are required to pay a service fee equivalent to 3% of the net revenue generated through their subnet operations to the Timeleap Network treasury.

Katana NFT

Staking a Katana NFT reduces the revenue share obligation by 0.25%. Only one Katana NFT can be staked per subnet. The Katana NFT must be staked at the time of subnet launch. The Katana NFT must be staked for the entire duration of the subnet's operational period.

Subnet Discovery

Subnets are required to register with the Timeleap Network registry. This registry is a public record of all subnets, their owners, and their associated metadata. The registry is designed to facilitate subnet discovery and interoperability within the Timeleap Network. It allows users to easily find and interact with subnets that meet their needs, while also providing a transparent view of the subnet landscape.

Access to Timeleap Plugins

Subnets are eligible to access official Timeleap plugins and services under the Timeleap Network umbrella and under certain conditions. Timeleap reserves the right to charge a fee for access to these plugins and services.

Subnets must apply for access to these plugins and services, and Timeleap reserves the right to deny access to any subnet that does not meet the requirements. The requirements for access to these plugins and services are subject to change at any time, and Timeleap reserves the right to revoke access to any subnet that does not meet the requirements.

Subnets that are granted access to these plugins and services must comply with the terms and conditions set forth by Timeleap. Failure to comply with these terms and conditions may result in the revocation of access to these plugins and services.

Access to Timeleap Marketplaces

Apps, APIs, and other services that are built on top of the Timeleap Network are eligible to access official Timeleap marketplaces under the Timeleap Network umbrella and under certain conditions. Timeleap reserves the right to charge a fee for access to these marketplaces.

Rationale

TEP-4 introduced the subnet model to enhance scalability and customization by externalizing consensus and governance. However, this freedom requires a unifying protocol for responsibility, risk, and reward. TEP-5 fills that gap by enforcing economic commitment through staking, defining network fee obligations based on subnet growth, and enabling a governance-based penalty system for non-compliance.

The tiered staking model ensures fair access while creating financial alignment between subnet operators and the network. Restaking resets, lock durations, and operational windows help prevent abuse and encourage subnet operators to plan long-term. Additionally, the introduction of slashing and decommissioning creates a clear deterrent to bad behavior, while reputation and fines enable a more nuanced response to minor faults.

Altogether, TEP-5 strengthens the federation by ensuring that even independently governed subnets remain economically and ethically aligned with the broader network mission.

Backwards Compatibility

This TEP is backwards compatible with the existing Timeleap Network as it only affects how the network is managed and governed. All existing features and functionalities of the Timeleap Network will remain the same.

Reference Implementation

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References

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