🚨 Bittensor, the flagship of decentralized AI, is experiencing its most severe governance crisis in history. Covenant AI, the network's most successful subnet developer, announced its complete withdrawal from Bittensor via X on Friday, causing TAO to plummet from $337 to $258 in 24 hours.

What happened?

➡️ Covenant AI officially withdrew: "We can no longer build or raise funds on Bittensor because governance is not meaningfully distributed."
➡️ TAO fell sharply: As of Friday morning, it had lost 18% of its value, with B****** data showing a 22.47% drop from $332.5 on April 10th to $257.8.
➡️ Selling volume exploded: 24 hours before the withdrawal announcement, TAO selling volume reached its highest level since December 2024 — analysts are calling it a "calculated exit."

Covenant's accusations:

Revenue halted: Allegedly subnet issuances were suspended without warning.
Usurpation of governance: "Jacob Steeves maintains effective control over the triumvirate, resists delegation, and unilaterally implements changes" — "This is a theater of decentralization."
Community powers revoked: Allegedly moderator rights were restricted and "direct economic pressure" was applied.
Structural problem: Even Bittensor documents state that governance is held by a "Triumvirate" composed of Opentensor Foundation employees, not a fully open model.

Bittensor founder's response:

Jacob Steeves (Const) denied the allegations:
"I cannot halt subnet issuances, I am no different from a normal TAO holder."
He stated that the tokens he sold were alpha holdings in three subnets that were "non-functional and 100% in burn code," which is a natural part of the dTAO system.

Why this project was important:

Covenant AI developed Covenant-72B, considered the largest decentralized LLM training in history on Bittensor Subnet 3 — a 72 billion parameter model trained on 70+ distributed nodes, without a data center, using consumer hardware.

Jensen Huang praised it: The Nvidia CEO called this work an "extraordinary technical achievement" on the All-In Podcast on March 19.
Anthropic support: The project had previously been praised by Nvidia and Anthropic.
This achievement boosted TAO by 140% in the last 6 weeks, triggering Grayscale's TAO Trust application.

UPDATE — Founder sale

According to crypto analyst Jesus Martinez's on-chain tracking, Covenant AI founder Sam Dare's wallet sold 37,000 TAO approximately 6 hours after the split — worth about $10 million. The sell-off is seen as the main catalyst that accelerated the panic selling in the market.

What does this mean for the market? 🤔

Bittensor's promise was "decentralized AI like Bitcoin." The fact that the network's most successful builder came out saying "the promise was a lie" hit not only the price but also the narrative. The $300 psychological support level for TAO has been lost, and analysts are pointing to the $250 level as the next risk.

The Liberman brothers' summary for decentralized networks is clear: "If the infrastructure you build on can be used against you, that decentralization is only cosmetic."
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