Governance Dispute Triggers 18% Slide in Bittensor (TAO) as Covenant AI Exits

Covenant AI, a prominent developer on the Bittensor network, has officially exited the ecosystem, citing a concentrated governance structure that contradicts the project's decentralized ethos. Founder Sam Dare characterized the network's current state as 'decentralization theatre,' claiming that founder Jacob Steeves maintains unilateral control over the system and resists the transfer of authority. The dispute centers on the 'Triumvirate' governance model, which Covenant AI argues allows Steeves to deploy changes without consensus. Dare alleged that the project faced direct economic pressure through token sales and the suspension of emissions to its specific subnet, as well as restrictions on community moderation powers. Jacob Steeves has denied these claims, asserting that he possesses no privileges beyond those of standard TAO holders. Steeves explained that his recent token sales were related to alpha holdings on non-operational subnets and denied any improper restriction of moderation rights, stating that any removals were temporary. The conflict has had an immediate effect on the market, with the TAO token falling approximately 18% over a 24-hour period. Trading data shows sell volume hitting its highest level since December 2024, leading some analysts to suggest the exit was a calculated execution. The exit is particularly notable given that Nvidia CEO Jensen Huang previously praised Covenant AI's technical achievements in pre-training a large decentralized LLM on Bittensor Subnet 3, calling it a remarkable achievement.