Covenant AI exits Bittensor after governance dispute; SN3, SN81, SN39 cited, TAO falls 15%

Covenant AI, the owner of subnets SN3, SN81, and SN39, has announced it is leaving the Bittensor ecosystem. The decision marks a significant shift within the AI-focused decentralized network, where Covenant had been one of the most prominent subnet operators.

Allegations of centralized control within “decentralized” network

In a public statement on X, Covenant AI founder Sam Dare said the departure stems from governance conflicts with Bittensor co-founder Jacob Steeves, also known as “Const.” Dare argued that the network’s decentralization promise is misleading, calling it “decentralization theatre” and claiming that no single entity was supposed to control the system.

Dare further alleged that Steeves maintains effective authority through a “triumvirate structure” managing multisig upgrades. According to Covenant, actions taken against its subnets included suspension of emissions, removal of moderation privileges, and deprecation of subnet infrastructure. The founder also accused Steeves of applying economic pressure through token sales during periods of operational conflict.

Market impact

Covenant stated it had developed Covenant-72B, described as a major decentralized large language model pre-training effort within Bittensor. Despite this, the team said it will continue building decentralized AI systems outside the network.

Following the announcement, TAO dropped about 20%, falling from $338 to $250 before partially recovering near $294. The community reaction on X was divided, with criticism over the abrupt exit. Steeves responded indirectly, suggesting future subnets may operate as “true commodities” independently.

Mark Jefferey, partner at Bittensor Fund, commented that;

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.