Bittensor’s native token, TAO, fell by double digits on Thursday after Covenant AI announced its exit from the decentralized network due to centralization and governance concerns.
According to CoinGecko data, after the Covenant AI announcement, TAO fell more than 15% from about $337 to $284. The token is trading at $292 at the time of writing, down 9% in the past 24 hours.
Covenant AI, which built the large-scale Covenant-72B model using decentralized contributors, argued that the Bittensor network’s governance structure is not actually fully decentralized.
The team said that despite the network’s proclaimed decentralization principles, key decisions and operational control remain concentrated in a small number of parties.
Covenant AI accused Bittensor founder Jacob Steeves of exercising unilateral control over key aspects of the network.
“These actions include direct economic pressure applied through halting emissions to the subnet, removing coordination capabilities through proprietary community channels, unilateral decommissioning of subnet infrastructure, and visible large-scale token sales timed to moments of operational conflict,” the team noted.
Covenant AI said it can no longer continue building on Bittensor under these circumstances and will continue its research and development efforts off-network.
“Distributed and permissionless AI training is not a Bittensor capability; it is a technical capability that our team is eager to advance. Our research, our team, our models, and our vision align with ours,” the team added. “We have some very exciting projects and news in the works and will be sharing announcements with the public soon.”
“This will prove to be the first subnet on Bittensor to run headless and as a true commodity,” Steves said in response to claims about centralization within Bittensor.
TAO soared nearly 90% in March, while subnet tokens mechanically linked to TAO through staking-backed automated market makers posted up to 400% amplified returns.
This gathering was supported by Subnet 3’s Covenant-72B model. High-profile endorsements from Jensen Huang and Chamath Palihapitiya add credibility to Bittensor and strengthen investor confidence in the ecosystem.
Disclosure: This article was edited by Vivian Nguyen. Please see our Editorial Policy for more information on how we create and review content.
