Covenant AI, a developer of artificial intelligence subnets on Bittensor, said it will leave the network over alleged centralization of governance and punitive actions by co-founder Jacob Steeves. Steeves disputed the claims. The public dispute was followed by a sharp drop in TAO, Bittensor’s native token.
Covenant AI Announces Exit Over Governance Disputes
In a statement published Friday, Covenant AI founder Sam Dare said the team will cease building on Bittensor, a decentralized AI network that incentivizes machine learning contributions via blockchain. Dare cited “decentralization concerns” and governance disputes, writing that the project’s “foundational claim” of being decentralized and permissionless is contradicted by “how the network is actually governed,” describing Bittensor as a “decentralized theater.”
Covenant AI has been one of Bittensor’s most active contributors, operating three subnets: Templar (SN3), Basilica (SN39), and Grail (SN81). The team’s Covenant-72B model previously drew notable industry attention and coincided with a rally in TAO, the network’s native token used for incentives and emissions.
Dare alleged Bittensor’s founder, Jacob Steeves (also known as “Const”), maintains effective control over the network’s leadership structure, resists the transfer of authority, and can deploy changes without consensus. He also accused Steeves of actions targeted at Covenant AI in recent weeks, including suspending emissions to its subnets, overriding moderation in community channels, publicly deprecating subnet infrastructure, and applying “direct economic pressure” through timed token sales.
Bittensor Founder and Community Push Back
Steeves denied the allegations in posts on X, saying he does not have the ability to suspend emissions. He stated that he sold some of his alpha holdings on the three Covenant subnets because they were “not running” and operating near “100% burn code,” adding that such trades affect emissions the same way any other buys or sells do and that he has “no privilege beyond what normal TAO holders have.”
Addressing moderation and channel deprecation, Steeves said Dare “specifically deprecated his own channels,” particularly on Discord, and was deleting posts containing “genuine, honest criticism.” Steeves said he temporarily removed Dare’s ability to delete others’ posts before reinstating it, but did not remove his moderator role. A community member, Alex DRocks, who participates in Bittensor’s Discord, publicly supported parts of Steeves’s account, claiming to have witnessed post deletions and channel deprecation in real time.
Steeves also rejected claims that he conducted large token sales to exert pressure, saying he sold less than 1% of what he had invested in Covenant AI’s teams.
Market Reaction: TAO Volatility Follows Dispute
Following the announcements, TAO fell about 25% from roughly $340 to a multi-week low near $250 before recovering toward $260. An analyst known as Ardi noted that TAO’s sell volume reached its highest level since December 2024 roughly a day before Covenant AI’s statement, describing the move as a “calculated exit” by larger holders who allegedly sold ahead of the headline. The analyst also said the chart had been in an “accumulation continuation phase,” but warned that elevated sell volume at key support could challenge the trend.
What’s at Stake
The dispute highlights ongoing tensions over governance and decentralization within Bittensor, which coordinates AI model contributions across independent subnets. How the network addresses these concerns could influence developer participation, community trust, and TAO’s market dynamics in the near term.