TAO Token Plunges 18% as Covenant AI Exits Bittensor Over Centralization Claims

Bittensor's native TAO token suffered a sharp 18% decline within hours, wiping out gains from a recent 100% rally. The sell-off was triggered by the high-profile departure of Covenant AI, one of the largest subnet operators on the network, amid serious governance allegations against Bittensor's founder.

Covenant AI, which operated subnets SN3, SN81, and SN39, announced its exit on April 10. Founder Sam Dare publicly accused Bittensor co-founder Jacob Steeves of exercising centralized control over what is marketed as a decentralized protocol. Dare described the project's governance as "decentralization theatre," alleging that Steeves unilaterally suspended emissions to Covenant's subnets, revoked their moderation privileges, deprecated their subnets, and executed large token sales without community consensus. Dare further claimed that Steeves operates through a "triumvirate" structure that keeps real authority concentrated in his hands.

Following the announcement, Dare liquidated his entire TAO holdings — over 37,000 tokens — effectively exiting the ecosystem entirely and intensifying downward pressure on the token's price.

At the time of writing, TAO was trading near $263, down from a 24-hour high of $341. Trading volume surged by 156%, reflecting panic selling and profit-booking across the market. Analysts flagged additional risks, noting the token had broken below its 200-day moving average and was approaching the 50-day moving average near $250. The Relative Strength Index fell to 41, pointing toward continued bearish momentum.

Derivatives data added to the concern, with total Bittensor futures open interest declining to approximately $392.59 million. Platforms including OKX, Gate, Bitget, Hyperliquid, and LBank recorded notable drops in futures activity, though major exchanges Binance and Bybit had yet to reflect a similar correction.

The incident raises broader questions about decentralization standards in AI-focused blockchain networks at a time when investor scrutiny is intensifying.