TAO, the native token of Bittensor, dropped by double digits on Thursday after Covenant AI announced its departure from the decentralized network due to concerns over centralized control and governance.
CoinGecko data shows that TAO dropped over 15% from around $337 to $284 following Covenant AI’s announcement. The token was trading at $292 at press time, down 9% in the last 24 hours.
Covenant AI, which built the large-scale Covenant-72B model using decentralized contributors, alleged that the Bittensor network’s governance structure is not fully decentralized in practice.
The team said key decisions and operational controls remain concentrated among a small number of actors despite the network’s stated decentralization principles.
Covenant AI accused Jacob Steeves, Bittensor’s founder, of exercising unilateral control over key aspects of the network.
“These actions include the suspension of emissions to our subnets, the removal of our moderation capabilities over our own community channels, the unilateral deprecation of our subnet infrastructure, and direct economic pressure applied through large, visible token sales timed to moments of operational conflict,” the team pointed out.
Covenant AI said it could no longer continue building on Bittensor under these conditions and that it would continue its research and development efforts outside of the network.
“Decentralized, permissionless AI training is not a Bittensor feature. It is a technological capability that our team is eager to advance. Our research, our team, our models, and our vision go with us,” the team added. “We have very exciting projects and news underway and will be sharing announcements with the public very soon.”
“This will prove to birth the first subnets on Bittensor that run headless and as true commodities,” Steeves said in response to claims about centralization within Bittensor.
TAO jumped roughly 90% in March, while subnet tokens, mechanically linked to TAO through staking-backed automated market makers, posted amplified returns of up to 400%.
The rally was supported by Subnet 3’s Covenant-72B model. High-profile endorsements from Jensen Huang and Chamath Palihapitiya added credibility to Bittensor, strengthening investor confidence in the ecosystem.