Bittensor (TAO) Slumps 18% After Covenant AI Exit News

Founder Sam Dare alleged that decision-making power is concentrated with Bittensor founder Jacob Steeves, a claim Steeves denied. The dispute also included accusations of suspended subnet emissions and reduced moderation access, which Steeves attributed to normal market dynamics and temporary actions. Following the controversy, TAO’s price dropped.

Bittensor Faces Backlash

Bittensor (TAO) is under pressure after a public dispute with subnet developer Covenant AI. The controversy raised fresh concerns about the project’s governance model, and TAO’s price action reflects uncertainty among investors.

Covenant AI announced its departure from the Bittensor network, and accused the protocol of operating under a centralized governance structure. Founder Sam Dare described the system as “decentralization theatre,” and claimed that meaningful decision-making power is concentrated in the hands of Bittensor founder Jacob Steeves, also known as Const. According to Dare, this lack of distributed governance made it difficult for the team to continue building or raising capital in the ecosystem.

Statement from Covenant AI on X

The dispute centers around Bittensor’s current governance design, which includes a transitional “Triumvirate” structure where members of the Opentensor Foundation hold root permissions alongside a senate. While intended as a temporary framework, critics argue that it undermines the network’s decentralization claims.

Covenant AI also alleged that its subnet was targeted through the suspension of emissions, reduced moderation privileges, and indirect economic pressure via token sales. However, Steeves strongly denied these accusations by stating that he does not have the authority to halt emissions and operates under the same permissions as other TAO holders. 

He explained that any changes in emissions were a result of normal market dynamics tied to token buying and selling, and clarified that moderation restrictions were only temporary.

TAO Price Drops Sharply 

The governance controversy appears to be weighing on market sentiment. According to the latest data, Bittensor is trading at approximately $262.47 after a 18.7% decline over the past 24 hours.

TAO’s price action over the past 24 hours (Source: CoinCodex)

The price chart shows that TAO was trading above the $320 level earlier in the day before experiencing a sharp sell-off. The drop pushed the price below $290 and $270, with a brief low forming closer to the $250 region. Since then, the asset has struggled to recover.