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TAO fell more than 18% over 24 hours after Covenant AI said it plans to leave the BitTensor network, citing decentralization concerns. Covenant AI, one of the network’s best-known subnet operators, alleged misconduct by BitTensor founder Jacob Steeves, while Steeves denied the claims.
Covenant AI founder Sam Dare said the network is not truly decentralized, arguing that a single actor can suspend subnet emissions, override owners’ authority over community spaces, publicly deprecate projects without due process, and use token sales to compel compliance.
“When a single actor can suspend a subnet's emissions, override an owner's authority over their own community spaces, publicly deprecate projects without process, and use token sales as a coercive mechanism to compel compliance, that is not decentralization,” Dare posted on X.
Dare added: “It is centralized control with decentralized branding.”
Dare alleged that Steeves suspended Covenant’s subnet emissions—the mechanism by which TAO distributes tokens to miners and validators based on performance within subnets. He also alleged Steeves used control over Covenant’s community spaces, limiting the firm’s ability to communicate with its community.
Steeves denied Covenant AI’s accusations, saying he does not have the ability to suspend emissions. He also alleged that Dare, in turn, was deprecating community channels and deleting posts within them.
“I do not have the ability to suspend emissions,” Steeves posted on X.
Covenant recently gained attention for permissionless training of the Covenant-72B model. The development was highlighted by Chamath Palihapitiya and discussed with Nvidia founder Jensen Huang on the All-In Podcast.
Around the time the podcast aired in March, TAO surged about 50%, rising from $247 on March 19 to $370 about a week later.
Covenant AI operated three subnets—markets dedicated to producing specific AI tasks—on the BitTensor network. The Templar subnet (SN3) focused on decentralized pre-training, while Basilica’s (SN39) focused on decentralized compute.
In a statement tied to the incident, Dare said Covenant AI could not continue building on a network where the claim of decentralization and permissionlessness is contradicted by how the network is governed.
“We cannot in good conscience continue to build on a network where the foundational claim we make to our investors, that this infrastructure is decentralized and permissionless, is contradicted by the reality of how the network is actually governed,” Dare said.
Dare added that Covenant AI was leaving the BitTensor network “with deep frustration.”
According to BitTensor block explorer data cited as Taostats, Covenant’s three subnets now appear as “deprecated” among other active subnets.
TAO recently changed hands around $272.70, erasing nearly all of the gains recorded after Covenant’s model training was highlighted on the All-In Podcast.
The token is down about 64% from its all-time high of $757 reached in May 2024.

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