Covenant AI Withdraws Amid Centralization Claims
Covenant AI, a prominent developer of Bittensor subnets SN3, SN81, and SN39, officially withdrew from the Bittensor network. Bittensor operates as a decentralized artificial intelligence network, enabling developers to build and train AI models while earning $TAO tokens. Covenant AI was a major contributor, responsible for Covenant-72B, characterized as the largest decentralized Large Language Model (LLM) training initiative. The departure was accompanied by accusations against Bittensor's governance structure and its founder, Jacob Steeves. Covenant AI alleged that Bittensor's operational framework was inconsistent with its foundational promises of decentralization, citing specific instances of centralization and misconduct by Steeves.
Accusations, Token Sale, and Official Responses
Covenant AI's accusations centered on Bittensor founder Jacob Steeves ('Const'), alleging he exercised 'punitive' power and maintained unilateral control, contradicting Bittensor's stated commitment to decentralization. Following the withdrawal announcement, Covenant AI founder Sam Dare sold 37,000 $TAO tokens from his personal wallet. This sale, immediately after the public disclosure, occurred after $TAO had grown over 50% this year, partly fueled by mentions from Nvidia CEO Jensen Huang in connection with projects like Templar, associated with Covenant AI. In response, a Bittensor co-founder publicly denied claims regarding suspended subnet emissions. Other Bittensor developers responded by asserting Covenant AI's founder acted irrationally and was motivated by greed, a view supported by a segment of the community.
Market and Community Impact
The $TAO token declined following Covenant AI's announcement and the token sale, falling between 15% and its recent highs. Within 24 hours, its value decreased by 20.1% to $268.22, and over three days, $TAO fell from approximately $350 to $250. The market capitalization of $TAO decreased by an estimated $900 million to over $1 billion overnight, triggering approximately $9 million in $TAO long position liquidations. Community sentiment registered an average score of 0.30, with members describing the situation as 'unhinged' and 'absolutely wrecked.' The Bittensor community holds differing views, with some attributing Covenant AI's actions to financial motivations and others concerned about centralization claims. Despite the negative sentiment, $TAO's mindshare increased by 2.6% during this period.