what's The DAO?

The DAO, short for Decentralized Autonomous Organization, was the first major implementation of a blockchain-based venture capital fund launched on the Ethereum network in April 2016. It operated without traditional management structures, relying instead on smart contracts to enable token holders to vote on investment proposals. Participants contributed Ether (ETH) during its crowdfunding phase, receiving DAO tokens in return, which granted voting rights proportional to their stake. At its peak, it raised over $150 million, representing about 14% of all Ether in circulation at the time, making it one of the largest crowdfunding efforts in history. The project's code was open-source, allowing community governance for funding startups and projects through automated, transparent mechanisms. However, a vulnerability in the smart contract code was exploited in June 2016, leading to the drainage of approximately one-third of its funds (around $60 million at the time) to a subsidiary contract known as TheDarkDAO. This incident sparked intense debate within the Ethereum community about immutability versus intervention, ultimately resulting in a controversial hard fork that created Ethereum (ETH) and Ethereum Classic (ETC). The DAO's collapse highlighted early risks in decentralized finance, influencing the evolution of DAOs with better security practices. Though defunct, The DAO's legacy endures as a foundational experiment in decentralized governance, demonstrating both the potential and pitfalls of code-driven organizations on blockchain.

The DAO is a historical example in blockchain governance, known for its 2016 hack and Ethereum's hard fork.