The DAO was a decentralized autonomous organization built on the Ethereum blockchain. It was created in 2016 and aimed to function as a venture capital fund for the Ethereum ecosystem, allowing investors to vote on which projects to fund using Ethereum's native cryptocurrency, ether. The DAO was designed to be a revolutionary new way of funding projects, but it ultimately led to one of the biggest crises in Ethereum's history.
In June 2016, an unknown attacker exploited a vulnerability in The DAO's smart contract, allowing them to drain one-third of The DAO's funds, worth over $50 million at the time, into a "child DAO." The attacker's actions triggered a debate among the Ethereum community on how to handle the situation, as the DAO was designed to be a decentralized autonomous organization that operated without the need for central authority.
Eventually, a group of Ethereum developers proposed a controversial solution known as a "hard fork," which would create a new version of the Ethereum blockchain that would revert the DAO funds back to their original owners. The community was split on whether to proceed with the hard fork, as some argued that it went against the principles of decentralization and immutability that underpinned the blockchain.
Despite the controversy, the hard fork was implemented in July 2016, resulting in two separate blockchains: the new version of Ethereum, which became known as Ethereum (ETH), and the old version of Ethereum, which was renamed Ethereum Classic (ETC).
The aftermath of the DAO hack and subsequent hard fork had long-lasting effects on the Ethereum community. Some believed that the hard fork was necessary to prevent a bigger crisis, while others saw it as a betrayal of Ethereum's founding principles. The split also led to a division of developer resources and created two separate communities with different priorities and visions for the future of Ethereum.
Today, Ethereum (ETH) remains one of the largest and most active POS blockchain ecosystems, while Ethereum Classic (ETC) continues to exist as a separate POW blockchain with a smaller but dedicated community of developers and supporters.