In the summer of 2016, the decentralized autonomous organization known as the DAO became the defining crisis of Ethereum’s early years. A smart contract exploit scooped up millions of dollars worth of ether (ETH) from the initial project, and the community’s response — a controversial hard fork to recover those funds — split the original chain from the current one, leaving behind the old chain, known as Ethereum Classic.
The DAO was once the largest crowdfunding effort in crypto history, but faded into a cautionary tale about governance, security and the limits of “code is law.”
Now, almost a decade later, the story has taken an unexpected turn. What was lost, or rather, left untouched, is recycled as a ~$150 million (at today’s prices) security endowment for the Ethereum ecosystem.
The grant, now known as the DAO Security Fund, will stake some of the 75,000 dormant ether (ETH) and use the proceeds through community-driven funding rounds to support Ethereum security research, tooling and rapid response efforts, while opening up claims to any remaining eligible token holders.
At the center of this story is Griff Green, one of the original DAO curators and a veteran of Ethereum’s decentralized governance.
“When the DAO hack happened [in 2016]obviously, I jumped in and led pretty much everything except the hard fork,” Green said of assembling the white hat group that saved funds on the original Ethereum chain. “We hacked all these hackers. It was direct DAO wars”.
This effort, along with others, helped save funds that otherwise might have been lost forever.
At the time, the hard fork restored about 97% of the DAO’s funds to token holders, but left a small portion, about 3%, in limbo. These “edge case” funds came from quirks of the original smart contracts: people who paid more than expected, those who burned tokens to form sub-DAOs, and other anomalies that didn’t map cleanly.
Over time, the remaining balance, once only worth a few million, ballooned into something far more significant due to ethers [ETH] appreciation. “The value of the funds we control has grown dramatically … well over 75,000 ETH,” a blog post for the new DAO fund said.
Green and his fellow trustees have spent the last decade quietly helping people recover funds and manage those remaining balances. But as he tells it, the landscape has changed. “Six volunteers secured $300 million with decades of keys. It didn’t make sense,” he told CoinDesk in an interview. “With all these AI hacks and stuff, we just got a little scared.” Their old security model is simply no longer suitable for protecting nine-figure sums, Green said.
Instead of letting these funds sit idle forever, the team has decided to stake ETH and use the proceeds to fund Ethereum security initiatives, honor claims indefinitely, and professionalize governance and key management. “We can stake these funds, keep claims open forever, and use the stake rewards to fund Ethereum security projects,” Green explained.
The fund will distribute capital through decentralized mechanisms such as quadratic funding, retroactive public goods funding and ranked choice voting for proposals.
‘The world’s financial backbone’
For Green, the revival is also personal.
The DAO hack was Ethereum’s first existential test, revealing how experimental the ecosystem still was. Almost a decade later, he argues, the industry remains vulnerable in various ways.
“MetaMask, hot wallet keys, just any kind of private keys on your daily driver computer is probably the main fuel for an entire cybercrime industry,” Green said. “The fact that we have billions of dollars of hotkeys on like 10,000 laptops spread all over the world has an industry of cybercrime.”
The persistence of hacks, phishing schemes and smart contract exploits frustrates him. “Not only surprises me, it disappoints me and frustrates me,” he said, describing the state of Ethereum security today.
It is urgent to shape how the new fund will work. Unlike the Ethereum Foundation’s more top-down grant process, the DAO Security Fund is designed as a bottom-up experiment that allows participants in the DAO to decide how funds should be distributed. Round operators will apply to distribute funds, security experts will help set eligibility standards, and stake rewards will provide a renewable pool of capital.
If Ethereum is to become, what many believe it is, the core infrastructure of global finance, Green says security must come first.
“Ethereum is on the verge of being the financial backbone of the world if it fixes security,” he said.
In Green’s view, the DAO Security Fund is therefore both a continuation of unfinished work and a forward-looking tool to secure Ethereum as it scales.
Read more: Ethereum OGs revive DAO with $220 million security fund, Unchained reports
