What is DAO?

Launched in 2016, the DAO was a pre-existing independent organization (DAO) aimed at operating as an investor-led firm. Recommended as a transformation project, DAO raised ether (ETH) to $ 150 million USD and was one of the first large-scale fundraisers and high-profile projects built on the Ethereum blockchain – then one year old. Less than three months after the launch, the DAO was hacked and 60 million ether stolen. The Ethereum blockchain, on which DAO was built, was later put on a fork to recover stolen funds, which were returned to investors.

Features of DAO
Flat and Fully Democratic
Members vote to implement any changes
No intermediary is required to tally the votes and implement the changes
Automatic Decentralization for offered services
Transparent Activities

The DAO Hack

The sale of the tokens was scheduled to last for 28 days, during which the tokens were “closed,” after which the DAO would take effect. In the three weeks of the sale of the token, the DAO had raised more than $ 150 million from more than 11,000 investors, making it one of the largest fundraising campaigns in history at that time. However, even before the token sale ended, a few observers expressed concern about the dangers of the DAO code. Specifically, computer scientists were concerned that the error of DAO’s wallet smart contract would allow them to be released. While the planners were trying to fix the error, the attacker exploited the risk and began withdrawing funds from the DAO.

Meanwhile, the Ethereum community discussed how to respond to the attack. The failure of DAO would not only mean financial losses for investors, but also negative consequences for the newborn Ethereum network. DAO had become such an investment project that its contracts contained about 14% of all ether (ETH) distributed at the time. In just one year, the promising technology of Ethereum and the community was facing a real threat.

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