Bittensor’s TAO Leads Crypto Losers After Key Subnet Operator Departs

The crypto market rose by over 1.4% over the past day. However, Bittensor (TAO) missed the market-wide recovery.

The token dropped over 9% over the past 24 hours. The decline made TAO the worst-performing top-100 cryptocurrency by market cap. At press time, it traded at $292.

Bittensor (TAO) Price Performance. Source: BeInCrypto Markets

The selloff followed Covenant AI’s announcement that it is leaving the Bittensor network. The team operated three subnets, Templar (SN3), Basilica (SN39), and Grail (SN81), making it one of the protocol’s most prominent contributors.

Sam Dare, the founder of Covenant AI, cited concerns about decentralization as the reason for the departure. In a public statement, Dare accused Bittensor co-founder Jacob Steeves of exercising centralized control over what is marketed as a decentralized network.

Specifically, Covenant AI alleges that Steeves suspended emissions to its subnets, stripped its moderation access over its own community channels, unilaterally deprecated its subnet infrastructure, and applied economic pressure through strategically timed token sales.

“We cannot in good conscience continue to build on a network where the foundational claim we make to our investors, that this infrastructure is decentralized and permissionless, is contradicted by the reality of how the network is actually governed,” Dare wrote. “Bittensor operates a triumvirate structure, three individuals who manage the multisig for network upgrades, presented to the community as distributed governance. It is not. It is decentralization theatre.”

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The exit marks a dramatic shift in sentiment. Covenant AI’s Covenant-72B model was previously a key trigger for a significant TAO rally. The altcoin appreciated after NVIDIA CEO Jensen Huang referenced the model during an appearance on the All-In Podcast.

Despite leaving Bittensor, Covenant AI said it will retain its research team, existing work, and the models. The company indicated that new project announcements are expected soon.

“Covenant AI’s mission has not changed. Decentralized, permissionless AI training is not a Bittensor feature. It is a technological capability that our team is eager to advance,” the post added.

Whether the departure triggers further governance debate within the Bittensor community remains to be seen in the days ahead.

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