Bittensor’s native token, TAO, plunged 25% in six hours, dropping from $337 to $253. The crash wiped out over $650 million in market capitalization and triggered $9.1 million in long liquidations.
Key Takeaways:
- Covenant AI left Bittensor on April 8, alleging co-founder Jacob Steeves maintains centralized control.
- TAO plummeted 25% to $253, wiping $650 million in market cap and triggering $9.1 million in liquidations.
- Future trust in Bittensor remains shaky after Nvidia CEO Jensen Huang recently praised its decentralized AI.
Covenant AI Exit and Grievances
TAO, the native token of the Bittensor protocol, plummeted following allegations from Covenant AI that co-founder Jacob Steeves has centralized control—a direct contradiction of the project’s decentralized mission. Market data shows TAO tumbled nearly 25% in just six hours, dropping from $337 to $253.
While the token recouped some losses, the crash erased more than $650 million in market capitalization, leaving it at $2.57 billion. Despite this volatility pushing its seven-day performance to -12.8%, TAO remains up 37% over the last 30 days.
This controversy strikes just weeks after Bittensor received praise for decentralized AI from figures such as Nvidia CEO Jensen Huang. Two days after announcing Covenant AI’s departure from Bittensor, founder Sam Dare released a statement detailing the grievances that prompted the move. The allegations against Steeves include claims that he unilaterally suspended a subnet’s emissions, overrode owners’ authority within their own community spaces and publicly deprecated projects without following established processes.
Allegations of Coercive Governance
Most critically, Dare alleged that Steeves used large, visible token sales as “punitive” tools to coerce compliance during operational conflicts. “These were not governance decisions made through transparent consensus,” Dare said. “They were actions taken by one man who never relinquished control.”
Furthermore, Dare asserts that Steeves maintains effective control over the triumvirate and resists any meaningful transfer of authority. He alleges that Steeves unilaterally implements changes without a formal process or consensus. According to Dare, other individuals involved serve merely as “legal shields”—positioned to bear accountability and legal risk while Steeves remains insulated from consequences.
The fallout triggered $9.1 million in long liquidations on Friday. Trading volumes surged to $1.72 billion on April 10, a massive spike compared to the $500 million average seen earlier in the month.