Simply put
- About 75,000 ETH from outstanding DAO contracts is set to be redirected into a long-term security fund.
- This action formalizes earlier intentions by Ethereum’s pioneers to allocate unclaimed resources for the benefit of the ecosystem.
- Governance of the fund will depend on community-driven grant processes instead of centralized developer control.
Assets linked to the 2016 DAO failure are being transformed into a major cryptocurrency security fund nearly ten years after the hack that led to Ethereum’s significant split.
Griff Green, a co-founder of Giveth and one of the original overseers of the recovered DAO assets, announced on Thursday the launch of the DAO Security Fund. This fund aims to utilize around 75,000 ETH, valued at about $220 million, to bolster Ethereum’s security.
During a discussion on Laura Shin’s Unchained podcast, Green indicated that this initiative underscores both the repercussions and enduring effects of the DAO breach, describing it as a pivotal moment for security practices within Ethereum.
“The DAO experience really invigorated the security sector in Ethereum,” Green remarked. “Prior to the DAO hack, the audit industry was virtually nonexistent.”
This initiative transforms one of Ethereum’s initial, most costly missteps into a sustainable funding source aimed at network security, with unclaimed funds from the DAO collapse—once a marker of crypto immaturity—now repurposed to safeguard a network worth billions today.
The new fund will draw from the unclaimed assets tied to the DAO’s bankruptcy. While most investors have since moved on after a controversial hard fork in 2016, some assets stayed locked due to edge cases managed by a select group of curators.
The value of Ethereum has surged since then, making these leftover assets now worth more than the roughly $150 million the DAO initially raised.
Green mentioned that the fund will gather about 70,500 ETH from the DAO’s ExtraBalance contract and approximately 4,600 ETH from the curators’ multi-signature wallet.
Most of Ethereum’s holdings (around 69,420 ETH) are staked for long-term endowments, while staking rewards support various security initiatives. Some of the funds maintain liquidity for necessary expenses.
Green stated that funding decisions will employ community-oriented mechanisms like secondary funding, retroactive funding, and ranked-choice voting, with independent operators overseeing grant distributions.
While the original entity was termed DAO, this new initiative is called TheDAO.
The 2016 DAO incident collapsed due to a flaw in a smart contract that enabled hackers to steal around $60 million from Ethereum, leading to a hard fork and the birth of Ethereum Classic.
This event remains one of the most critical crises in the network’s history.
The new curatorial board features Ethereum co-founder Vitalik Buterin, MetaMask security researcher Taylor Monaghan, and ENS co-founder Alex van der Sande.
“I envision a future where individuals feel more secure keeping their assets on Ethereum than in banks,” Green expressed.
