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Ethereum’s $100M Ghost Fund Rises From the 2016 DAO Collapse — This Time Different?

Nearly a decade after one in all crypto’s most defining crises, unclaimed Ether from the 2016 hack of The DAO is being repurposed to help Ethereum’s safety, reviving a undertaking whose collapse as soon as threatened the community’s survival.

This time, its backers say, the aim will not be experimentation however strengthening Ethereum’s defenses utilizing assets left behind by the occasion that first uncovered its vulnerabilities.

This week, Ethereum developer and longtime communal member Griff Green announced that tons of of thousands and thousands of {dollars} in Ether that went unclaimed following The DAO hack will likely be initiated into a brand new security-centered funding initiative.

Source: Unchained

In an look on the Unchained podcast, Green asserted that vast quantities of ETH are trapped in contracts that have been made to compensate victims of the exploit, however they by no means really claimed them.

Instead, he mentioned, that cash will now be used to generate a staking revenue and fund safety work all through the Ethereum ecosystem.

Inside the DAO Hack and Ethereum’s Historic Fork

In early 2016, the DAO was initiated as a decentralized enterprise capital, which permitted tokenholders to make choices on a shared foundation about the allocation of capital. It collected over $150 million in ETH, the greatest crowdfunding undertaking at the time.

In June 2016, an attacker used a vulnerability in its sensible contracts, known as a reentrancy vulnerability, to empty its sensible contracts of round 3.6 million ETH right into a second contract.

The hack induced an existential disaster in Ethereum and a controversial onerous fork that refunded most of the stolen cash to the traders.

That ruling divided the neighborhood and shaped two blockchains: Ethereum and Ethereum Classic.

While the fork restored the majority of funds, the restoration course of was not clear. Green mentioned round $6 million was put aside to deal with advanced instances involving traders who have been unable to assert their ETH by customary mechanisms.

He joined a multisignature pockets established to handle these instances. Over time, greater than 80% of that steadiness was claimed, however the the rest, now value round $200 million at present costs, was left untouched.

DAO Hack Era Funds Revived for Network Security

According to Green, these unclaimed funds will kind the spine of what’s being called The DAO Security Fund. The plan entails roughly 70,500 ETH held in an ExtraBalance Withdrawal contract, together with about 4,600 ETH and DAO tokens from the unique curator multisig.

The capital will likely be staked, with yield directed towards funding safety efforts fairly than distributed as a one-time payout. The initiative is being coordinated alongside the Ethereum Foundation and aligns with its broader “Trillion Dollar Security” push.

Green mentioned the fund will function utilizing decentralized allocation strategies fairly than top-down grants. Proposed mechanisms embody quadratic funding, retroactive public items funding, ranked-choice voting, and different DAO-style distribution fashions.

Oversight will contain well-known figures from the Ethereum safety neighborhood, together with Vitalik Buterin, MetaMask co-founder Taylor Monahan, Jordi Baylina, and members of the SEAL 911 response group.

Giveth, a public items funding platform co-founded by Green, can also be anticipated to play a task in administering allocations.

Ethereum’s Long Road From Early Hacks to Billion-Dollar DAOs

The transfer comes as Ethereum safety has turn into a central concern for each builders and establishments.

The DAO hack itself helped give rise to the modern smart contract audit industry, which barely existed earlier than 2016.

Since then, Ethereum has grown into the spine of decentralized finance, NFTs, and tokenized belongings, with billions of {dollars} frequently secured by sensible contracts.

The revival of the DAO title additionally displays how far decentralized governance has developed since its early days.

By 2025, decentralized organizations collectively managed greater than $24 billion in treasury belongings, with main protocols like Uniswap, Arbitrum, and Optimism overseeing billion-dollar balances.

The put up Ethereum’s $100M Ghost Fund Rises From the 2016 DAO Collapse — This Time Different? appeared first on Cryptonews.

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