TLDR:
- Covenant AI’s exit from Bittensor’s top subnets triggered a sharp $TAO price drop near $265.
- Co-founder Jacob Steeves denied centralization claims but apologized for losses suffered by holders.
- Community miners are reviving subnets 3, 39, and 81 using open-source code after Covenant’s departure.
- The Locked Stake upgrade would tie subnet ownership to time-locked $TAO to ensure team commitment.
Bittensor co-founder Jacob Steeves issued a public apology on April 11 after Covenant AI’s exit sent $TAO prices sharply lower.
Covenant AI had operated three of the network’s top-performing subnets, including Templar for large-model AI training.
The firm accused Steeves of centralizing control through emission suspensions and timed token sales. Steeves denied the claims but acknowledged the financial harm to $TAO holders. The token has since stabilized near $265 as community miners work to revive the affected subnets.
Covenant AI’s Departure and the Accusations That Followed
Covenant AI operated subnets 3, 39, and 81, which ranked among Bittensor’s most active and recognized nodes. The firm’s sudden exit left miners and investors without clear direction on those critical subnets. Its departure marked one of the most disruptive events in Bittensor’s recent history.
Samuel Dare, a central figure at Covenant AI, was identified by Steeves as the source of the conflict. Dare allegedly took deliberate steps to cause maximum harm to the protocol and its wider community. The accusations made against both parties quickly drew attention across the crypto space.
The specific claims against Steeves included suspending subnet emissions and conducting timed token sales. These actions, Covenant AI argued, contradicted Bittensor’s core permissionless and decentralized design. Steeves rejected all allegations and addressed them across multiple posts on X.
The exit triggered a sharp price drop in $TAO, rattling confidence among long-term holders and active miners. Community members quickly turned to the open-source codebase to assess how subnet operations could continue. The episode exposed real vulnerabilities in how subnet ownership and commitment are currently structured.
Steeves Issues Personal Apology to $TAO Holders
Steeves addressed $TAO holders directly, acknowledging the financial and emotional damage caused by the crisis. He described the events as deeply personal, calling Dare a former trusted colleague and friend. His statement was candid and notably free of corporate deflection.
Steeves wrote that those one helps most can sometimes inflict the greatest harm. He connected the betrayal to broader human failures that inevitably arise within open, permissionless systems. Despite that, he stated he could not regret building Bittensor on principles of radical openness.
Community miners moved quickly, organizing to restart the three suspended subnets using publicly available code.
Former Covenant AI team members were reportedly in discussions to help continue the original work. The open-source foundation of those subnets made a technical recovery genuinely possible.
Locked Stake Proposal Aims to Prevent Future Subnet Exits
Steeves proposed a protocol-level upgrade called Locked Stake to close accountability gaps in subnet ownership. The feature would tie subnet control to time-locked $TAO, making team commitment verifiable on-chain. Ironically, it was reportedly one of the last initiatives Dare worked on before leaving.
Under the proposal, subnet owners would signal long-term conviction through the duration of their token lock. Investors would gain greater predictability before committing capital to any team’s subnet. Teams with longer lock periods would effectively compete on commitment, not just technical performance.
Steeves acknowledged that failing to implement the upgrade sooner was a genuine error on his part. He suggested earlier adoption might have prevented the current breakdown entirely. A detailed community discussion is planned for the upcoming Thursday call on the Bittensor Discord.
The proposal targets one of crypto’s oldest unsolved problems: measuring team commitment in open systems without relying on legal contracts.
Steeves argued that legal accountability is too slow and too corruptible for the pace of modern AI development. A cryptographic solution, he maintained, is the only credible path forward for decentralized AI networks.
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