BitTensor TAO Token Plunges 18% as Covenant AI Exits Over Decentralization Concerns

BitTensor AI Token Plunges as Top Builder Departs Over Decentralization Doubts - Decrypt

Steeves denied the claims, but the market reacted negatively regardless. Tensions between the founder of BitTensor and a prominent firm building on the decentralized AI network have helped put TAO, the native BitTensor token, into a spiral, falling 18.5% in the last 24 hours amid the public drama. The plunge comes as Covenant AI, one of the best-known subnet operators on BitTensor's network, announced its intentions to leave the ecosystem altogether, alleging malfeasance by BitTensor founder Jacob Steeves, who it claims has acted out against the firm building on his network. "When a single actor can suspend a subnet's emissions, override an owner's authority over their own community spaces, publicly deprecate projects without process, and use token sales as a coercive mechanism to compel compliance, that is not decentralization," Covenant AI founder Sam Dare posted on X. "It is centralized control with decentralized branding," he added. Dare alleged that Steeves suspended Covenant's subnet emissions, the method by which TAO distributes tokens to miners and validators for performance within subnets. He also alleged that Steeves exerted his control over Covenant's community spaces, hampering the firm's ability to communicate with its community. But Steeves denied the claims, alleging that it was Dare in fact who was deprecating community channels and deleting posts from within. "I do not have the ability to suspend emissions," Steeves posted on X. Covenant recently gained attention for the permissionless training of the Covenant-72B model, an act that was highlighted by billionaire Social Capital founder Chamath Palihapitiya and was detailed to Nvidia founder Jensen Huang on the "All-In Podcast." Around the time of the airing in March, TAO surged around 50%, jumping from $247 on March 19 to $370 just a week later. The firm operated three subnets -- or markets dedicated to producing a specific AI task -- on the network. For example, its Templar subnet (SN3) was focused on decentralized pre-training, while Basilica's (SN39) focus was on decentralized compute -- distinct parts of the artificial intelligence stack. "We cannot in good conscience continue to build on a network where the foundational claim we make to our investors, that this infrastructure is decentralized and permissionless, is contradicted by the reality of how the network is actually governed," Dare said in his statement on the incident. "It is therefore with deep frustration that we announce Covenant AI's departure from the BitTensor network," he added. The firm's trio of subnets now show as "deprecated" among other active subnets according to BitTensor block explorer, Taostats. TAO recently changed hands around $272.70, having erased nearly all the gains since Covenant's model training was noted on the "All-In Podcast." The token is down about 64% from its all-time high of $757 from May 2024.

Covenant AI Leaves Bittensor Amid Decentralization Concerns, TAO Drops 18%

Bittensor subnet developer Covenant AI said Friday that it is leaving the decentralized artificial intelligence network, accusing Bittensor of operating under a concentrated governance structure that undermines its decentralization claims. In a Friday post on X, Covenant AI founder Sam Dare said the team could no longer build on or raise for Bittensor because its governance was not meaningfully distributed. "It is decentralization theatre," Dare said. "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." The dispute cuts to the core of Bittensor's decentralization pitch. Covenant AI alleged that founder Jacob Steeves, known as Const, exerts outsized influence over governance and network operations, an accusation Steeves denied. Bittensor's governance documents describe a transitional system in which a "Triumvirate" of Opentensor Foundation employees holds root permissions alongside a senate, rather than a fully open governance model. Covenant AI said Steeves had taken several actions against the project in recent weeks, including suspending emissions to its subnet, restricting moderation powers in community channels and applying "direct economic pressure" through visible token sales during the dispute. Steeves rejected the allegations, claiming that he cannot suspend subnet emissions and that he does not hold "any privilege beyond what normal TAO holders have." In a Friday X response, Steeves said he sold some of his "alpha holdings on his three subnets because they were not running and were on near 100% burn code," which changed the emissions the same way "all buys and sells on Bittensor do." Steeves also denied stripping Covenant AI of its moderation rights, saying he only temporarily removed the team's ability to delete posts before restoring it. He added that large token sales would have been visible onchain. "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," he added. Bittensor previously garnered mainstream attention after Nvidia CEO Jensen Huang praised the decentralized training run on Bittensor Subnet 3, calling Covenant's milestone of pre-training the largest decentralized LLM a "remarkable technical achievement," during the All-In Podcast on March 19. Related: Bittensor's TAO price may plunge 40% within five weeks: Fractal data The governance dispute also weighed on Bittensor's (TAO) token, which was down around 18% over the previous 24 hours as of Friday morning, according to market data. However, sell volume on TAO rose to its highest level since December 2024, about 24 hours before Covenant AI announced its departure. "If you think that's a coincidence, you don't understand the game you're playing. This was a calculated exit and execution," wrote crypto analyst Ardi in a Friday X post. Cointelegraph reached out to Covenant AI and Bittensor for comment but had not received a response by publication. The dispute raises wider concerns for projects striving for decentralization, according to David and Daniil Liberman, co-creators of the decentralized layer-1 blockchain 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," they told Cointelegraph.