Covenant AI has withdrawn from the Bittensor network over governance centralization concerns, triggering a sharp drop in TAO’s price and renewed debate over true decentralization.

Steeves denies those claims, saying he cannot suspend subnet emissions and that he holds no special privileges beyond a typical TAO holder; he notes Covenant AI’s moderation rights were only temporarily restricted and that large token sales would be visible on-chain.

Following the announcement, accusations emerged that Sam Dare sold roughly 37,000 TAO worth about $10 million from subnets Grail, Basilica, and Templar, fueling claims of an exit scam and investor losses.

The piece emphasizes that the analysis is not investment advice and urges readers to perform independent research.

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Covenant-72B and Subnet 3 had contributed to the rally and investor confidence before Covenant AI’s departure.

TAO is expected to stay volatile in the near term, with longer-term stability depending on resolving governance issues and rebuilding trust.

Experts warn that meaningful decentralization requires more than cosmetic governance, cautioning that infrastructure controlled by developers undermines decentralization.

Technical analysis suggests support near $230 and a possible move toward $144 on broader retracements, implying a potential 45% downside from current levels.

Industry observers say Bittensor can continue functioning beyond Covenant, with TAO retaining value despite the departure.

Bittensor plans a lock-based subnet ownership framework to tether subnet value to long-term developer commitments and enable smoother token reallocations, while continuing growth in open subnets and potentially ETF support for TAO.

Covenant AI’s work, including Covenant-72B and Subnet 3, drew attention from prominent figures and boosted visibility, highlighting decentralized AI training capabilities even as turmoil unfolds.