On April 10th, Covenant AI – the entity behind one of the most prominent subnets on the Bittensor Network (TAO) – officially announced its departure from the project. This decision stemmed from deep disagreements regarding governance mechanisms and network control. Founder Sam Dare stated that the team could no longer continue building the product in an environment they believed contradicted the decentralized spirit that had initially attracted the community of builders, miners, validators, and investors.
According to Dare, Bittensor's core promise is that no single entity holds absolute control. However, he argues that the operational reality has not reflected that. Covenant AI Capital pursued a decentralized vision for training AI models, and they made a significant impact with the development of Covenant-72B – XEM one of the largest decentralized large-scale language model (LLM) pre-training efforts ever implemented. This success has made Covenant one of the most prominent subnets in the ecosystem.
However, the group stated they could not remain due to a direct conflict with Bittensor co-founder Jacob Steeves (Const). Dare accused Steeves of attempting to regain control of the subnet as Covenant grew beyond its original size. This statement quickly sparked controversy about the true level of decentralization at Bittensor.
One notable aspect is the governance structure, referred to as "triumvirate"—three individuals controlling the multisig that upgrades the network. According to Dare, this model is promoted as a decentralized governance mechanism, but is in reality just a "decentralization charade." He argues that Steeves effectively retains control, refuses to relinquish power, and can implement changes unilaterally without process or community consensus.
The actions allegedly taken to pressure Covenant included suspending emission rewards for their subnet, removing community censorship, disabling subnet infrastructure, and even exerting economic pressure through large-scale Token Sale coinciding with conflict operations. Dare described these as punitive measures from an individual who never Capitulation control of the network.
Following its departure, Covenant affirmed its commitment to building decentralized AI outside of Bittensor and will soon announce new projects. This fueled speculation about the potential emergence of a direct competitor in the decentralized AI field – a highly competitive area as many blockchain projects shift towards AI integration following the global boom in LLM.
The announcement of their departure triggered a strong reaction on social media. Some members of the community were shocked by the sudden Chia , while others criticized Covenant for not notifying the community in advance. Debate quickly spread about how internal crises should be handled within Web3 projects – where transparency is XEM a core value.
The market reacted almost immediately. The price of TAO plummeted by approximately 15% in just two hours, from $338 to $285, before recovering slightly to around $294. This volatility reflects the ecosystem's dependence on key subnets and demonstrates that investors remain highly sensitive to governance risks in decentralized AI projects.
Jacob Steeves later responded indirectly on X but did not directly address the allegations. He suggested that the event would spur the formation of “headless” subnets that function as real commodities, while also hinting at plans to implement a “lock-based subnet ownership” mechanism. Under this model, subnet ownership would be tied to the team's long-term commitment, allowing investors to track Token Lockup unlocking, revalue the subnet sooner, and shift their confidence to another team if needed.
