Covenant AI exits Bittensor over ‘decentralization theatre,’ TAO drops 18%

Covenant AI said it was leaving Bittensor due to its overreaching control on subnets and their large-scale TAO token sales, but Bittensor’s founder denied all allegations.

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.

“Not large. 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.

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Source: CoinTelegraph