What is The DAO?
Let's find out The DAO meaning, definition in crypto, what is The DAO, and all other detailed facts.
The DAO was the first decentralized autonomous organization (DAO) in blockchain history. It was launched in April 2016. The project was developed as a self-governed, decentralized venture capital fund and earned $150 million after the initial token crowdsale. The DAO worked on mitigating the human error factor in fund management processes.
At one point in its existence, the DAO held roughly 14% of the total Ether (ETH) supply, its primary capital focus. The organization used an open-source code to allow for community contributions.
The DAO followed a decentralized model, meaning that there was no central authority interfering with the governance. Its goal was to create a decentralized self-governing organization that would allow its members to participate in the activities from anywhere in the world. This led to the DAO becoming the first venture capital fund that was completely decentralized.
In June 2016, barely two months after its launch, the DAO was compromised when an anonymous paper revealing the vulnerabilities of the code was released. The investors received a warning to avoid voting on any of the DAO projects until the issues have been fixed.
Hackers soon got hold of the paper and took advantage of the vulnerabilities detailed by the anonymous source, leading to one of the biggest hacks in crypto history. The hackers acquired over 3.6 million ETH from the DAO which then accounted for roughly $50 million. Today, it would be worth over $1.2 trillion.
Since the DAO held a significant amount of the overall ETH funds, Ethereum was forced into a hard fork. The scandal led to several large-scale cryptocurrency exchange platforms delisting the DAO token from the trade. The DAO’s lifespan was cut short.
Although the initial DAO experienced a significant failure, the mechanism of a decentralized autonomous organization has remained popular. Many blockchain-based projects rely on the principles of self-governance and work on avoiding the same code vulnerabilities experienced by the DAO.