TAO's Trust Issues: Covenant AI Says Bittensor's 'Decentralization' Is More Like a Suggestion

Covenant AI, one of the largest and most active subnets on Bittensor, has officially dipped out of the network, and its exit letter reads like a breakup text from someone who's been ghosted by a 'decentralized' project. In a post on X, Covenant AI laid out its grievances, accusing Bittensor of "centralized control with decentralized branding." The team argued that key decisions remain influenced by centralized authority—network leadership suspended subnet emissions, removed community control, deprecated infrastructure, and even applied economic pressure through token sales. "We cannot raise capital, attract talent, or ask our community to commit resources on top of a foundation that one person can undermine at will," Covenant AI stated. "That is not a risk we are willing to pass on to the people who trust us." Touché. The timing couldn't be worse for TAO holders. Following Covenant AI's exit, the token extended intraday losses by 13.3%, bringing total drawdown to nearly 25% within 72 hours of trading. Much of the earlier bullish momentum—including the $43 million Q1 revenue narrative and Grayscale ETF filing optimism—has been largely unwound. From a broader perspective, the AI token sector continues to show strength. CoinMarketCap data shows AI-related tokens climbing nearly 13% in market cap while posting 70% trading volume growth over the same period. TAO itself rallied nearly 40% on the quarter, even as Bitcoin posted a 22.04% Q1 decline. So while the AI narrative remains structurally intact, Covenant AI's departure has raised some uncomfortable questions about Bittensor's commitment to true decentralization. For now, TAO's weakness looks less like a short-term shakeout and more like a structural concern that won't be easily shaken off.