Covenant AI, a subnet developer within the decentralized artificial intelligence network Bittensor, has decided to exit the platform, citing issues related to governance and decentralization. The announcement comes as the TAO token experiences an 18% drop in value, raising significant concerns among investors and stakeholders.
On April 10, 2026, Covenant AI's founder, Sam Dare, took to social media to express dissatisfaction with Bittensor's governance model, claiming that it operates under a concentrated control structure that contradicts its decentralization promises. In his post, Dare stated, “It is decentralization theatre,” highlighting concerns that Jacob Steeves, the founder of Bittensor, maintains excessive control over governance and network operations.
The core of the dispute revolves around the alleged lack of meaningful distribution of governance powers, which Covenant AI argues hampers their ability to innovate and raise funds within the Bittensor ecosystem. Dare accused Steeves of resisting any significant transfer of authority and of unilaterally implementing changes without consensus from the community.
Allegations and Denials
Covenant AI has claimed that in recent weeks, Steeves took actions detrimental to their project, including suspending emissions to their subnet and exerting “direct economic pressure” through significant TAO token sales. However, Steeves has vehemently denied these allegations, asserting that he does not possess any privileges beyond those of regular TAO holders and that he cannot unilaterally suspend subnet emissions.
In his response, Steeves explained that he had sold some of his holdings in three subnets due to their non-functionality and near 100% burn code, which altered emissions in a manner similar to any other buy or sell on the Bittensor platform. Furthermore, he clarified that the temporary removal of Covenant AI’s moderation rights was restored shortly thereafter and that any large token sales would have been transparent on the blockchain.
This public disagreement poses a significant threat to Bittensor’s image, especially after receiving notable recognition from industry leaders. Recently, Nvidia CEO Jensen Huang commended Bittensor for its decentralized training capabilities, further validating its potential in the AI landscape.
Market Reaction and Future Implications
The discord between Covenant AI and Bittensor has resulted in a sharp decline in the TAO token's market value, with reports indicating an 18% drop within a 24-hour period following the exit announcement. This downturn has sparked discussions among analysts, suggesting that the timing of the sell-off was strategic and not coincidental.
Crypto analyst Ardi commented on the situation, stating, “If you think that’s a coincidence, you don’t understand the game you’re playing. This was a calculated exit and execution.” In the wake of this dispute, the sell volume of TAO reached its highest level since December 2024, indicating heightened concern among investors.
The ongoing governance issues at Bittensor raise broader questions about the future of decentralized projects and the integrity of their governance structures. David and Daniil Liberman, co-creators of the Gonka protocol, shared their thoughts on the matter, emphasizing that decentralized networks must address whether their infrastructure can be weaponized against them, which would render their decentralization efforts superficial.
As the situation continues to unfold, both Bittensor and Covenant AI have yet to provide further comments, leaving the community to speculate on the long-term impacts of this governance dispute. The fallout from this event could significantly influence investor confidence in Bittensor and similar decentralized networks in the future.
Source: Cointelegraph News