Bittensor (TAO) drops 18% following news of Covenant AI's departure

crypthub

2 days ago

Governance Conflict

Sam Dare alleges that real decision‑making power in Bittensor rests with founder Jacob Steeves, a claim Steeves rejects. The dispute intensified after subnet developer Covenant AI announced its exit, accusing the protocol of a centralized governance model. Bittensor currently operates under a transitional “Triumvirate” that gives the Opentensor Foundation and a senate root permissions, intended as a temporary framework. Critics argue this structure contradicts the network’s decentralization promises.

Accusations and Counterclaims

Covenant AI claims its subnet suffered suspended emissions, reduced moderation rights, and indirect economic pressure via token sales. Steeves counters that he cannot halt emissions and that any emission changes reflect normal market buying and selling. He also states that moderation restrictions were temporary and applied uniformly to all TAO holders. The founder emphasizes that his authority is no greater than that of any other token holder.

Market Reaction

The governance controversy has weighed heavily on investor sentiment. TAO’s price dropped about 18.7% in 24 hours, falling to roughly $262 after sliding from above $320 earlier in the day. The token briefly touched the $250 level and has struggled to regain momentum since the sell‑off.