Subnet developer Covenant AI announced its exit from Bittensor, citing decentralization concerns and alleged punitive actions by Jacob Steeves, co-founder of the AI-focused network ecosystem.
Covenant AI slams Bittensor decentralization
On Friday, Covenant AI founder Sam Dare released a statement announcing the subnet developer’s exit from the decentralized artificial intelligence network Bittensor, citing governance disputes and decentralization concerns.
“We cannot in good conscience continue to build a network where our fundamental claim to investors that this infrastructure is decentralized and permissionless is inconsistent with the reality of how the network is actually managed,” Dare wrote, calling Bittensor a “decentralized theater.”
For context, Covenant AI was one of Bittensor’s most prominent contributors, operating three subnets: Templar (SN3), Basilica (SN39), and Grail (SN81). As reported by NewsBTC, the team’s Covenant-72B model, acknowledged by NVIDIA’s CEO and mentioned by Anthropic’s co-founder, recently caused a significant increase in TAO’s price.
Covenant AI’s founders argued in a statement that the problem with Bittensall’s alleged decentralization runs “deeper than a single incident” and asserted that the network does in fact have “centralized control with decentralized branding.”
He claimed that Bittensor’s founder, Jacob Steves, also known as Const., maintains effective control over the triumvirate structure in which the network operates, “resisting meaningful devolution and unilaterally rolling out changes whenever he chooses, without process or consensus.”
Additionally, Dare alleged that over the past several weeks, Steves has taken a series of actions against Covenant AI’s operations, including suspending emissions from Covenant AI’s subnets, disabling moderation features on community channels, publicly decommissioning subnet infrastructure, and applying “direct economic pressure” through strategically timed token sales.
Bitensor founder, community backlash
Steves quickly responded to the allegations, denying Dare’s claims in an X post. First, Bittensall’s founder addressed the emission suspension discussion and asserted that he did not have such capabilities, but that he sold some of his Alpha shares on the three subnets because “they were not running and were using almost 100% written code.”
“This changed emissions, as did all buying and selling on Bittensor. I have no privileges beyond those of a normal TAO holder,” he said.
Regarding deprecation and removal of moderation rights, Steves claimed that Dare “specifically deprecated his channels, especially his Discord channel,” and repeatedly deleted posts that were “pure and honest criticism.”
As a result, the moderator role was not removed, although he claims that “that ability was temporarily removed and later reinstated.” “I just stopped him from deleting other people’s posts in the channel.”
Alex DRocks, a member of the Bittensor community and participant in the Discord channel, supported parts of Steeves’ counterclaim. “I also saw the discord channel where legitimate posts were removed in real time and deprecated by Sam (owner of Covenant). Everything Const said above has been verified,” he wrote in the X thread.
“The deleted post was a criticism of sn39 redoing the exact same thing that other computing subnets are doing (…) What this proves is that Sam Dare couldn’t address a simple question without deleting the message,” DRocks continued.
Finally, Steves denies that he has engaged in any “large scale measurable token sales” to apply financial pressure, asserting that he has sold less than 1% of the amount he invested in Covenant AI’s team. TAO price crashes after ‘calculated exit’
Amid the controversy, Bittensall saw its token TAO fall 25% from around $340 to a multi-week low of $250, before rebounding towards the $260 level. Analyst Aldi noted that 24 hours before the Covenant AI news broke, TAO sales volumes reached their highest level since December 2024.
“If you think that’s a coincidence, you don’t understand the game you’re playing. This was a calculated exit and execution,” he said, explaining that large wallets that knew ahead of time “unloaded on a breakout attempt yesterday and were using its strength to nuke millions of dollars long before the headlines hit the market.”
Retail-sized wallets, on the other hand, had to absorb the pressure, competing to exit at 20% lower prices. The analyst noted that TAO is in a “cumulative continuation phase” following the recent breakout, but cautioned that “when the chart is at a major support level, the chart will struggle to absorb the 18-month high selling.”
