Bittensor TAO Drops 25% After Covenant AI Exit, Governance Fight

Covenant AI’s departure from the Bittensor network and public accusations by Covenant founder Samuel Dare that co-founder Jacob Steeves centralized control coincided with a roughly 25% decline in Bittensor’s native token, TAO, over 24 hours.

In an April 10 statement, Dare alleged that Bittensor suspended emissions to Covenant’s subnets, overrode the team’s moderation authority, deprecated its subnet infrastructure and applied economic pressure with timed token sales. He wrote that Bittensor’s multisignature governance functions as a “triumvirate” presented as distributed governance but operating as “decentralization theater,” and added that “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 market reaction was rapid. TAO moved from about $337 to a low near $254 within 12 hours and was trading near $261 at the time of reporting. Reports that Covenant AI sold about 37,000 TAO tokens, a holding valued at more than $10 million, followed Dare’s statement and contributed to selling pressure. The episode coincided with a decline in the price of shares in an over-the-counter Bittensor Trust, which traded at about $9.20 and was down more than 12% at the close on April 10.

Covenant AI operated three subnets on Bittensor, labeled 3, 39 and 81, and developed Covenant-72B, a 72-billion-parameter language model that was trained permissionlessly by more than 70 contributors using commodity hardware. The model had increased attention on Bittensor within the decentralized artificial intelligence community.

Jacob Steeves, who recently left the network, posted a recovery plan centered on a governance feature called Locked Stake. The mechanism would let subnet owners lock tokens for set periods, making both stake size and remaining lock time a public measure of commitment. Steeves wrote that Locked Stake was among the last items completed by Dare before he left the Opentensor Foundation and called his failure to implement it earlier his “real error.” He also said members of the mining community and possibly former Covenant contributors were organizing to maintain operations on the affected subnets.

Steeves said the Locked Stake proposal will be presented to the community at Bittensor’s next open Thursday call on its Discord server.

The specific allegations-suspended emissions, overridden moderation, deprecated infrastructure and token sales-have not been independently verified in the public record. Bittensor’s upcoming governance discussions and any formal vote on Locked Stake or other rules are expected to be the immediate steps for the network and its contributors.