Covenant AI Leaves Bittensor, Citing Centralized Control Under a Decentralized Label
On April 10, 2026, Covenant AI founder Sam Dare announced the team was permanently leaving the Bittensor ecosystem, publishing a detailed public statement on X that directly challenged the network’s core identity claim.
Covenant AI had been operating one of Bittensor’s highest-profile subnets, garnering mainstream attention in March 2026 when Nvidia CEO Jensen Huang praised the project’s work on Subnet 3 — describing Covenant’s milestone of pre-training the largest decentralized large language model as a “remarkable technical achievement” during an appearance on the All-In Podcast.
Despite that public recognition, Dare said the team could no longer build on or raise capital for Bittensor. His stated reason: the network’s governance is not meaningfully distributed.
“It is decentralization theatre. Jacob Steeves maintains effective control over the triumvirate, resists any meaningful transfer of authority, and deploys changes unilaterally whenever he chooses, without process and without consensus.” — Sam Dare, Covenant AI founder
The accusation targets Jacob Steeves — known in the community as “Const” — Bittensor’s founder and one of the most influential figures at the Opentensor Foundation. Dare alleged that Steeves exerts outsized influence over the network’s governance, holds effective control over the Triumvirate (a transitional governance body composed of Opentensor Foundation employees), and acts unilaterally without community consensus.
The Specific Allegations and Steeves’s Response
Covenant AI outlined a series of specific grievances beyond the general governance critique. According to Dare, Steeves took several actions against the project in recent weeks: he allegedly suspended emissions to Covenant AI’s subnet, restricted the team’s moderation powers in community channels, and applied what Dare described as “direct economic pressure” through visible token sales during the active dispute.
Steeves rejected each allegation directly. In a public X response, he denied having the technical ability to suspend subnet emissions, stating he does not hold any privileges beyond what a normal TAO holder would have. On the token sales, he acknowledged selling some of his alpha holdings on three subnets — but said those subnets were not running and were on near-100% burn code, meaning the sales changed emissions in the same way any buy or sell on the Bittensor system would.
“Not large. Less than 1% of what I had invested in his teams. Visibility is impossible to avoid in my position. I reserve my right to buy and sell tokens, which is what underpins the entire system of dTao.” — Jacob Steeves (Const), Bittensor founder
Steeves also denied stripping Covenant AI of moderation rights, saying he only temporarily removed the team’s ability to delete posts before restoring it. As of publication, Cointelegraph had not received a response from either Covenant AI or Bittensor to requests for comment.
Bittensor’s governance documentation describes a transitional “Triumvirate” system in which Opentensor Foundation employees hold root permissions alongside a senate structure. The governance documents do not present this as a fully decentralized model — they frame it explicitly as a transitional arrangement. Critics argue this concession in the documentation validates Covenant AI’s central claim.
TAO Falls 30%, Sell Volume Spikes Before the Announcement
The market reaction was immediate and severe. TAO dropped approximately 30% from its weekly high, trading near $249 at the time of reporting. At one point earlier in the day, the token had declined by as much as 18% in a single 24-hour window.
Notably, sell volume on TAO rose to its highest level since December 2024 approximately 24 hours before Covenant AI published its public announcement. The timing drew immediate attention from market observers, with crypto analyst Ardi writing on X that the volume spike was not coincidental.
“If you think that’s a coincidence, you don’t understand the game you’re playing. This was a calculated exit and execution.” — Ardi, crypto analyst
The Friday selloff was accompanied by a roughly 250% surge in trading volume and approximately $11.83 million in liquidated positions across the futures market. Of that total, $9.71 million were long liquidations, indicating that bullish traders were caught significantly offside. The forced selling from liquidated longs added additional downward pressure to the spot price decline.
Technical Analysis Points to Another 25-45% Downside
Beyond the immediate selloff, analysts tracking TAO’s technical structure flagged additional downside risk rooted in historical price patterns.
TAO is currently consolidating inside the 0.382-0.5 Fibonacci retracement range — a zone that has historically served as a short-term consolidation area before deeper corrections in prior macro-top patterns. In November 2025, a breakdown from this same range triggered a drop of over 30% toward the 1.0 Fibonacci level. A similar setup in June 2025 saw TAO break below the range before stabilizing near the 0.618 level.
If the current pattern repeats, the first support level to watch is the 0.618 Fibonacci level near $230. A failure to hold there opens the path toward the 1.0 Fibonacci retracement near $144 — approximately 45% below current levels.
A separately flagged fractal involving a confirmed golden cross between TAO’s 20-day and 200-day exponential moving averages had already projected a 40% selloff before the Covenant AI announcement. The governance dispute accelerated a move that technical analysts had already flagged as likely.
What the Dispute Reveals About Decentralized AI Networks
The Covenant AI exit raises a question that applies well beyond Bittensor: what does “decentralized” actually mean when a founding team retains root-level permissions over a network’s core functions?
David and Daniil Liberman, co-creators of the Gonka Protocol layer-1 blockchain, framed the issue to Cointelegraph in practical terms for builders:
“Decentralized networks that want serious builders have to answer one question: can the infrastructure you build on be used against you? If the answer is yes, the decentralization is cosmetic.” — David and Daniil Liberman, Gonka Protocol co-creators
Bittensor’s transitional governance model — where the Opentensor Foundation holds root permissions during what the documentation describes as an early phase — is not unusual for blockchain networks in their early years. The dispute is whether that transitional period has lasted too long, and whether the mechanisms for actually transferring authority to the community have been meaningfully advanced.
For TAO holders, the more immediate question is whether Covenant AI’s exit is an isolated incident or a signal of broader builder discontent. If other high-profile subnet operators share similar governance concerns but have not yet spoken publicly, the market risk extends well beyond the current selloff.
