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31 July 2021

Takeaways: 5 years after The DAO crisis and Ethereum hard fork

Takeaways: 5 years after The DAO crisis and Ethereum hard fork

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A vulnerability of a smart contract in one private DAO fund firstly to the leak of cryptocurrency worth tens of millions of dollars (billions as of today) and then to the hard fork of the second-largest blockchain network Ethereum.

The DAO was a startup that ran an investment fund in Ether (ETH) and operated as a smart contract on Ethereum.

The fund claimed from the very beginning that they operate under the terms and conditions of their smart contract that was nothing more than a code of a program deployed on the blockchain.

Though, The DAO became infamous due to a vulnerability in their program that allowed an unknown user to drain one-third of their funds.

In view of negative implications and high public pressure (the fund had more than ten thousand investors) faced by Ethereum, the network leaders decided to introduce a retroactive hard fork of their blockchain.

There were objectors of the hard fork, and so those who objected continued to use the original Ethereum blockchain, calling it Ethereum Classic (ETC).

Interestingly enough, right after this conduct, the Unknown (let us call them more neutral, not the “attacker”) published an anonymous letter stating that they did not believe it was a wrongdoing or any kind of violating either of law or terms, referencing that infamous statement on The DAO’s site of the prevalence of smart contract.

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