In the summer of 2016, the Decentralized Autonomous Organization, known as a DAO, became the defining crisis of Ethereum’s early years. A smart contract exploit siphoned millions of dollars worth of ether (ETH) from that initial project, and the community 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 cryptocurrency history, but it faded into a cautionary tale about governance, security, and the limits of “code is law.”
Now, almost a decade later, that story has taken an unexpected turn. What was lost, or rather left untouched, is being repurposed as a ~$150 million (at current prices) security endowment for the Ethereum ecosystem.
The endowment, now known as the DAO Security Fund, will stake some of the 75,000 idle ether (ETH) and deploy the yield through community-driven funding rounds to support Ethereum’s security research, tools, and rapid response efforts, while keeping claims open for remaining eligible token holders.
At the center of this story is Griff Green, one of the original curators of the DAO and a veteran of decentralized Ethereum governance.
“When the DAO hack happened [in 2016]“Obviously, I jumped into action and basically ran everything except the hard fork,” Green said of creating the white hat group that rescued funds on the original Ethereum chain. “We hacked all these hackers. It was straight up DAO wars.”
That effort, along with others, helped recover funds that otherwise would have been lost forever.
At that time, the hard fork restored about 97% of the DAO funds to token holders, but left a small fraction, 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 were not clearly mapped.
Over time, that leftover balance, once worth only a few million, ballooned into something much more significant due to the influence of ether. [ETH] appreciation. “The value of the funds we control has grown dramatically… over 75,000 ETH,” states a blog post for the new DAO fund.
Green and his fellow conservators have spent the last decade quietly helping people recover funds and managing these residual balances. But as he tells it, the panorama has changed. “Six volunteers were securing $300 million with decades-old keys. It didn’t make sense,” he told CoinDesk in an interview. “With all these AI hacks and stuff, we got a little scared.” Their old security model is simply no longer up to snuff to protect nine-figure sums, Green shared.
Rather than let these funds sit idle in perpetuity, the team decided to stake the ETH and use the returns 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 staking rewards to fund Ethereum security projects,” Green explained.
The fund will distribute capital through decentralized mechanisms, such as quadratic financing, retroactive financing of public goods, and ranked-choice voting on proposals.
‘The financial backbone of the world’
For Green, the revival is also personal.
The DAO hack was Ethereum’s first existential test, exposing how experimental the ecosystem still was. Almost a decade later, he maintains, the industry remains vulnerable in different ways.
“MetaMask, hot wallet keys, any kind of private key on your daily driver’s computer is probably the primary fuel for an entire cybercrime industry,” Green said. “The fact that we have billions of dollars’ worth of hotkeys on some 10,000 laptop computers around the world constitutes a cybercrime industry.”
The persistence of hacks, phishing schemes, and smart contract exploits frustrates him. “Not only does it surprise me, but it disappoints and frustrates me,” he said, describing the current state of Ethereum security.
That urgency is shaping how the new fund will work. Unlike the Ethereum Foundation’s more top-down grantmaking process, the DAO Security Fund is designed as a bottom-up experiment, allowing participants in the DAO to decide how to distribute funds. Round operators will apply to distribute funds, security experts will help set eligibility standards, and staking rewards will provide a renewable capital pool.
If Ethereum is to become what many believe it is, the central infrastructure of global finance, Green says security must come first.
“Ethereum is about to become the financial backbone of the world, if it fixes security,” he said.
The DAO Security Fund, in Green’s view, is therefore a continuation of unfinished work and a forward-thinking vehicle to safeguard Ethereum as it scales.
Read more: Ethereum OGs revive DAO with $220M security fund, Unchained reports
