TAO Plunges 18% as Covenant AI Abandons Bittensor Citing 'Facade of Decentralization'
In a dramatic departure, Covenant AI announced its exit from Bittensor, citing excessive centralized control over subnets and significant TAO token liquidations, while Bittensor's creator has refuted these claims.
On Friday, Covenant AI, a subnet developer within the Bittensor ecosystem, announced its withdrawal from the decentralized artificial intelligence platform, leveling accusations that Bittensor functions under a centralized governance framework that contradicts its public claims of decentralization.
Through a Friday statement posted on X, Sam Dare, who founded Covenant AI, explained that his team had reached a point where continuing to build on or secure funding for Bittensor projects was no longer viable, citing the lack of genuinely distributed governance authority.
It is decentralization theatre. Jacob Steeves maintains effective control over the triumvirate, resists any meaningful transfer of authority, and deploys changes unilaterally whenever he chooses, without process and without consensus.
Sam Dare, Covenant AI founder
The controversy strikes at the heart of what Bittensor promotes as its decentralized foundation. Covenant AI's accusations center on claims that Jacob Steeves, who goes by the name Const, wields disproportionate power over the network's governance and day-to-day operations, charges that Steeves has firmly rejected.
According to Bittensor's official governance documentation, the network operates under an interim framework where a "Triumvirate" consisting of Opentensor Foundation staff members retains root-level permissions working in conjunction with a senate, as opposed to implementing a completely open governance architecture.
Covenant AI alleges suspension of subnet emissions, while Bittensor's founder refutes all claims
According to Covenant AI, Steeves executed multiple actions targeting their project throughout recent weeks, which included halting emissions directed to their subnet, limiting their moderation capabilities within community discussion channels, and exercising "direct economic pressure" by conducting conspicuous token liquidations amid the ongoing conflict.
Steeves pushed back against these accusations, asserting that he lacks the authority to halt subnet emissions and maintains no "any privilege beyond what normal TAO holders have."
Through an X post on Friday, Steeves explained that he liquidated portions of his "alpha holdings on his three subnets because they were not running and were on near 100% burn code," which impacted emissions in the identical manner that "all buys and sells on Bittensor do."
Steeves further disputed the claim that he revoked Covenant AI's moderation privileges, clarifying that he merely implemented a temporary restriction on the team's post-deletion capabilities before subsequently reinstating them. He emphasized that substantial token liquidations would necessarily be traceable through blockchain records.
Less than 1% of what i had invested in his teams. Visibility is impossible to avoid in my position. I reserve my right to buy and sell tokens which is what underpins the entire system of dTao.
Jacob Steeves
Bittensor had recently captured widespread industry attention following public endorsement from Nvidia CEO Jensen Huang, who commended the decentralized training initiative conducted on Bittensor Subnet 3, describing Covenant's achievement of pre-training what became the largest decentralized LLM as a "remarkable technical achievement," during his appearance on the All-In Podcast on March 19.
TAO experiences surge in selling activity prior to Covenant AI's exit announcement
The governance conflict additionally exerted downward pressure on Bittensor's native (TAO) token, which experienced approximately 18% depreciation during the preceding 24-hour period as of Friday morning, based on available market data.
Interestingly, selling activity for TAO climbed to levels not witnessed since December 2024, occurring approximately 24 hours prior to Covenant AI's public announcement of their withdrawal. "If you think that's a coincidence, you don't understand the game you're playing. This was a calculated exit and execution," stated crypto analyst Ardi through a Friday post on X.
Cointelegraph made contact attempts with both Covenant AI and Bittensor requesting additional comment but had not obtained a response prior to publication.
The conflict highlights broader questions facing projects that claim decentralized operations, according to David and Daniil Liberman, who co-created the decentralized layer-1 blockchain known as the Gonka protocol.
Decentralized networks that want serious builders have to answer one question: can the infrastructure you build on be used against you? If the answer is yes, the decentralization is cosmetic.
David and Daniil Liberman, Gonka protocol co-creators