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 siphoned millions of dollars worth of ether (ETH) from that initial project, and the community’s response – a controversial hard fork to recoup those funds, split the original chain from the current chain, leaving behind the old chain, known as Ethereum Classic.
The DAO was once the largest crowdfunding effort in crypto history, but has transformed 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 transformed into a security endowment of approximately $150 million (at current prices) for the Ethereum ecosystem.
The endowment, now known as the DAO Security Fund, will stake a portion of the 75,000 dormant ether (ETH) and deploy the yield through community funding rounds to support Ethereum security research, tools, and rapid response efforts, while keeping claims open for all remaining eligible token holders.
At the center of this story is Griff Green, an early curator of the DAO and a veteran of Ethereum’s decentralized governance.
“When the DAO hack happened [in 2016]obviously I jumped into action and basically ran everything except the hard fork,” Green said of putting together the white hat group that saved the original Ethereum chain’s funds. “We hacked all those hackers. It was downright DAO wars.”
This effort, alongside others, helped recover funds that otherwise might have been lost forever.
At the time, the hard fork returned around 97% of the DAO’s funds to token holders, but left a small fraction, around 3%, in limbo. These “edge case” funds came from quirks of the original smart contracts: people paying more than expected, those burning tokens to form sub-DAOs, and other anomalies that were not clearly mapped.
Over time, this remaining balance, once worth only a few million, transformed into something much larger due to the energy of the ether. [ETH] appreciation. “The value of the funds we control has increased significantly… well beyond 75,000 ETH,” reads a blog post for the new DAO fund.
Green and his fellow conservatives have spent the last decade quietly helping people recover their funds and manage those residual balances. But as he tells it, the landscape has changed. “Six volunteers were getting $300 million with ten-year keys. It made no 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 suitable for protecting nine-figure sums, Green explained.
Rather than letting these funds sit idle in perpetuity, the team decided to stake ETH and use the yield 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 preferential voting for proposals.
“The financial backbone of the world”
For Green, the renewal is also personal.
The DAO hack was Ethereum’s first existential test, revealing just how experimental the ecosystem still was. Nearly a decade later, he says, the industry remains vulnerable in many ways.
“MetaMask, hot wallet keys, any kind of private keys on your daily driver’s computer are probably the main fuel for an entire cybercrime industry,” Green said. “The fact that we have keyboard shortcuts with billions of dollars on 10,000 laptops around the world constitutes a cybercrime industry.”
The persistence of hacks, phishing schemes and smart contract exploits frustrates him. “Not only does this surprise me, it disappoints and frustrates me,” he said, describing the current state of Ethereum security.
This urgency determines 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 DAO participants to decide how to distribute funds. Tower operators will apply to distribute funds, security experts will help set eligibility standards, and staking rewards will provide a revolving 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 poised to become the financial backbone of the world, if it improves security,” he said.
The DAO Security Fund, according to Green, is therefore both a continuation of unfinished work and a forward-looking vehicle to protect Ethereum as it evolves.
Read more: Ethereum OGs Relaunch DAO With $220 Million Security Fund, Unchained Reports
