Covenant AI Quits Bittensor: 'Decentralization Theatre' Sends TAO Down 18%

Covenant AI has announced it is leaving the Bittensor network. Founder Sam Dare called the project a "decentralization theatre" and said the team can no longer build on the platform because of founder Jacob Steeves' concentrated control. The TAO token fell 18% in 24 hours.

What Covenant AI is accusing

In a post on X, Dare wrote that Steeves maintains effective control over a "triumvirate" of Opentensor Foundation employees who hold root permissions over the network. Steeves introduces changes unilaterally, Dare argued, without process or consensus. "It is decentralization theatre," Dare wrote.

Beyond governance, Covenant AI leveled specific accusations: suspended emissions to their subnet, restricted moderation rights in community channels, and "direct economic pressure" through visible TAO sales during the dispute.

Bittensor's founder denies it all

Steeves rejected each accusation. He said he cannot suspend subnet emissions and holds no privileges beyond any regular TAO holder. He explained his token sales simply: his three subnets were idle and running near 100% burn, so his sales affected emissions the same way any buy or sell in Bittensor would.

On moderation, he said he only temporarily removed Covenant AI's ability to delete posts, then restored it. He called his token sales minimal: "less than 1% of what I had invested in his teams."

The market moved before the announcement

The chronology matters more than the accusations. TAO sell volume hit its highest level since December 2024 roughly 24 hours before Covenant AI posted on X.

Traders exiting positions converted TAO into USDT and other assets. Dare commented bluntly: "If you think that's a coincidence, you don't understand the game you're playing."

From Huang's praise to conflict in three weeks

On March 19, Jensen Huang appeared on the All-In Podcast and called Covenant AI's pre-training run a "remarkable technical achievement." Their team had trained the largest decentralized language model on Subnet 3. Bittensor was up over 100% in the month that followed.

By April, the picture had changed. TAO fell 30% from its weekly high before the official announcement, pointing to informed selling ahead of the news.

A question for every AI network

The Covenant AI dispute raises a challenge the entire decentralized AI-network sector faces. How do you tell real decentralization from branding? Bittensor itself describes its governance as a "transitional system" - a triumvirate of foundation employees alongside a senate, rather than a fully open model.

The conflict is unresolved. Covenant AI has left. Steeves denies everything. The market has already voted, and the TAO price shows it.