Bittensor’s TAO token dropped more than 9% in 24 hours after key subnet operator Covenant AI announced its departure, defying a broader crypto market rise of 1.4%.
The decline made TAO the worst-performing top-100 cryptocurrency by market capitalisation, with the token trading at $292 as investors reacted to the loss of a major network contributor.
“We cannot in good conscience continue to build on a network where the foundational claim we make to our investors, that this infrastructure is decentralised and permissionless, is contradicted by the reality of how the network is actually governed,”
Said Covenant AI founder, Sam Dare.
Covenant AI, which operated the Templar, Basilica and Grail subnets, accused Bittensor co-founder Jacob Steeves of exerting centralised control, including suspending emissions and removing access to its own community channels.
The company further alleged that its subnet infrastructure was deprecated and that economic pressure was applied through token sales, intensifying concerns around governance and decentralisation.
Despite exiting the network, Covenant AI confirmed it will retain its research team, existing work and models, including the Covenant-72B system that previously helped drive a rally in TAO after being referenced by Jensen Huang.
The departure marks a sharp shift in sentiment around Bittensor, with the potential for further governance scrutiny as Covenant AI signalled upcoming independent projects focused on decentralised AI development.
At the time of reporting, Bittensor price was $268.82.