Associated Incidents
The DAO (stylized Đ) was a digital decentralized autonomous organization,[5] and a form of investor-directed venture capital fund.[6]
The DAO had an objective to provide a new decentralized business model for organizing both commercial and non-profit enterprises.[7][8] It was instantiated on the Ethereum blockchain, and had no conventional management structure or board of directors.[7] The code of the DAO is open-source.[9]
The DAO was stateless, and not tied to any particular nation state. As a result, many questions of how government regulators would deal with a stateless fund were yet to be dealt with.[10]
The DAO was crowdfunded via a token sale in May 2016. It set the record for the largest crowdfunding campaign in history.[6]
In June 2016, users exploited a vulnerability in The DAO code to enable them to siphon off one-third of The DAO's funds to a subsidiary account. On 20 July 2016 01:20:40 PM +UTC at Block 1920000, the Ethereum community decided to hard-fork the Ethereum blockchain to restore virtually all funds to the original contract.[11] This was controversial, and led to a fork in Ethereum, where the original unforked blockchain was maintained as Ethereum Classic, thus breaking Ethereum into two separate active blockchains, each with its own cryptocurrency.
The DAO was delisted from trading on major exchanges such as Poloniex and Kraken in late 2016.
History [ edit ]
The computer code behind the organization was written by Christoph Jentzsch, and released publicly on GitHub.[6] Simon Jentzsch, Christoph Jentzsch's brother, is also involved in the venture.[6]
The DAO was launched on 30 April 2016 at 01:42:58 AM +UTC on Ethereum Block 1428757,[12] with a website and a 28-day crowdsale to fund the organization.[13] The token sale had raised more than US$34 million by 10 May 2016, and more than US$50 million-worth of Ether (ETH)—the digital value token of the Ethereum network—by 12 May, and over US$100 million by 15 May 2016.[13][14] On 17 May 2016, the largest investor in the DAO held less than 4% of all DAO tokens and the top 100 holders held just over 46% of all DAO tokens.[15] The fund's Ether value as of 21 May 2016 was more than US$150 million,[16] from more than 11,000 investors.[17]
As of May 2016, The DAO had attracted nearly 14% of all ether tokens issued to date.[1]
Since 28 May 2016 the DAO tokens were tradable on various cryptocurrency exchanges.[18]
A paper published in May 2016 noted a number of security vulnerabilities associated with The DAO, and recommended that investors in The DAO hold off from directing The DAO to invest in projects until the problems had been resolved.[19] An Ethereum developer on GitHub pointed out a flaw relating to "recursive calls" in early June that was picked up and blogged by Peter Vessenes, founder of the Blockchain Foundation on June 9, and by June 14, fixes had been proposed and were awaiting approval by members of The DAO.
On June 16 further attention was called to recursive call vulnerabilities by bloggers affiliated with the Initiative for CryptoCurrencies & Contracts (IC3).[20]
On June 17, 2016, The DAO was subjected to an attack that exploited a combination of vulnerabilities, including the one concerning recursive calls, and the user gained control[dubious – discuss] of 3.6 million Ether, around a third of the 11.5 million Ether that had been committed to The DAO; the affected Ether had a value of about $50M at the time of the attack.[2][21] The funds were put into an account subject to a 28-day holding period under the terms of the Ethereum contract so were not actually gone; members of The DAO and the Ethereum community debated what to do next, with some calling the attack a valid but unethical maneuver, others calling for the Ether to be re-appropriated, and some calling for The DAO to be shut down.[21][22] Eventually, the Ethereum network was hard forked to move the funds in The DAO to a recovery address where they could be exchanged back to Ethereum by their original owners.[23] However, objectors to the hard fork continued to use the original Ethereum blockchain, now called Ethereum Classic.
In September 2016 Poloniex de-listed DAO trading pairs,[24] and in December 2016 Kraken also de-listed the token.[25]
Operation [ edit ]
The DAO was a decentralized autonomous organization[26] that exists as a set of contracts among people that resides on the Ethereum blockchain;[27] it did not have a physical address, nor people in formal management roles. The original theory underlying the DAO was that by removing delegated power from directors and placing it directly in the hands of owners the DAO removed the ability of directors and fund managers to misdirect and waste investor funds.[28]
As a blockchain-enabled organization, The DAO claimed to be completely transparent: everything was done by the code, which anyone could see