Bittensor founder accuses former brother of betrayal; TAO’s sudden plunge sparks 9.1 million liquidations

Bittensor co-founder Jacob Steeves has broken his silence over the Covenant AI exit event, accusing its key figure Simon Dare of intentionally causing the greatest possible harm to the agreement and the community, and calling it a “betrayal by someone who was like a brother to us.” The TAO token fell to $253 over the weekend and triggered a $9.1 million long liquidation, with the price rebounding to $263 on April 13.

Event Trigger: Covenant AI Exits and Both Sides Publicly Point Fingers at Each Other

The direct trigger for TAO’s sharp drop was Covenant AI’s sudden exit. On the X platform, Simon Dare explained the background behind his resignation by implying that the decline in TAO’s price in the days leading up to the turmoil was caused by Steeves selling tokens, indirectly accusing him of putting pressure on community members through his sell-off actions.

Steeves immediately responded in a personal statement, saying Dare had been “someone he viewed like a brother,” and accusing him that the way he exited was intended to create “the greatest possible pain.” “He let down everyone who bought his tokens and trusted him. He betrayed all of us,” Steeves said.

Steeves also rejected Dare’s claims about centralization in Bittensor as “unfounded,” and suggested that his former partner may be facing a personal crisis. Even so, he acknowledged that the incident indeed revealed the “real threat” to network stability, and apologized to investors who felt that during this turmoil, the “financial rug was pulled out from under them.”

Locked Staking Proposal: Replace Personal Trust With Cryptographic Promises

Steeves believes that this crisis exposed inherent weaknesses in human-led governance—“greed and selfishness” being the root problem Bittensor was originally designed to counter. He proposed shifting the governance foundation of the agreement from legal responsibility to cryptographic commitments that can be enforced by code on-chain.

Its core solution is the “Lock Stake” mechanism:

Core Design Points of the Lock Stake Mechanism

Verifiable Long-Term Commitments: Subnet owners can lock tokens for a specific period; during the lock-up period, the tokens cannot be transferred, providing the community with a record of on-chain commitments that can be checked

Quantifiable Dimensions of Commitments: Use the remaining time before tokens become transferable combined with the current holdings to measure the strength of the commitment

Prevent “Financial Runaway”: During the lock-up period, the founder cannot carry out large-scale token transfers, reducing the likelihood of a sudden exit from a mechanism-level perspective

Pure Mathematical Rules Replace Brand Trust: The agreement’s stability no longer depends on personal credibility, but is guaranteed by publicly auditable on-chain rules

Steeves plans to hold a public meeting next Thursday on Bittensor’s Discord channel, formally presenting the design proposal for the lock staking mechanism and taking questions from the community.

Rebuilding the Affected Subnets: The Resilience Advantage of Open-Source Architecture

For the related subnets that fell into uncertainty due to Covenant AI’s exit, Steeves confirmed that the community has initiated a reorganization process. Since Bittensor is built entirely on open-source code, miners and remaining community members will take over and revive the related projects, and the agreement itself’s continued operation does not rely on any single team.

“Functionally speaking, these subnets should not change,” Steeves pointed out, emphasizing that the vision for the related tools belongs to the entire ecosystem rather than any individual. He reiterated that Bittensor is still “the most decentralized AI protocol to date,” and characterized this crisis as the necessary evolution of the protocol toward maturity, not a fundamental structural collapse.

Frequently Asked Questions

Why did Bittensor’s TAO token plunge 25% on April 10?

The sudden exit of Covenant AI was the direct trigger for this TAO drop. After the incident broke out, market confidence deteriorated rapidly; within less than six hours, TAO fell from $337 to $253, with a market cap evaporation of about $650 million, and it triggered a forced long liquidation of $9.1M. The public standoff between the co-founders on social media further intensified market panic.

How does the Lock Stake mechanism prevent similar events from happening again?

Lock staking allows subnet owners to lock tokens for a specific period, during which the tokens cannot be transferred. This mechanism replaces personal credibility with on-chain code, providing the community with a verifiable long-term commitment signal, preventing the founders from conducting large-scale sell-offs or suddenly exiting the protocol without warning—shifting from legal accountability to cryptographic enforcement.

After Covenant AI exits, can the related subnets continue to operate?

Steeves confirmed that because Bittensor is fully open source, the affected subnets will be taken over by miners and community members and reorganized. He said, “Functionally speaking, these subnets should not change,” and that the protocol’s open-source design is the core mechanism for preventing single points of failure and ensuring the ecosystem continues to operate.