Covenant AI Exits Bittensor, TAO Drops 25%

The Bittensor network, a blockchain platform focused on decentralized artificial intelligence, experienced a severe crisis on April 11 when prominent developer Covenant AI abruptly exited the ecosystem, accusing cofounder Jacob Steeves of exerting disproportionate control over governance. The departure triggered the liquidation of 37,000 TAO tokens by Covenant's founder, valued at approximately $10.2 million, sparking a cascade of sell-offs that drove the token's price down more than 25 percent from around $330 to a low of $263 within hours.

The conflict highlighted longstanding tensions within Bittensor's structure, where Covenant AI, a key subnet operator, publicly denounced what it described as centralized decision-making that undermined the project's decentralized ethos. This exit not only dissolved three subnets but also eroded investor confidence, leading to forced liquidations of leveraged positions and reduced staking activity during a period of low liquidity. Market participants noted that the sudden sale amplified downward pressure, as stop-loss orders activated and some holders rotated capital toward competing AI-focused tokens like NEAR, ICP, and FET, which saw...