Ethereum Turns The DAO Hack Into a $220M Security Fund

30th January 2026- The Ethereum Foundation, together with Ethereum co-founder Vitalik Buterin and several early contributors, has announced the formation of The DAO Security Fund. This new initiative converts long-unclaimed funds linked to the 2016 DAO hack into a permanent, security-focused endowment for the Ethereum ecosystem. Instead of allowing these assets to remain locked indefinitely, the initiative redirects them toward strengthening Ethereum’s defenses. In addition, Griff Green, a long-time Ethereum contributor who played a central role during the original DAO recovery efforts, will lead the fund.

High Signal Summary For A Quick Glance

📌 Key Takeaways 👥 Who Is Impacted 📊 Implications

Ethereum Foundation and Vitalik-backed TheDAO Security Fund repurposing unclaimed DAO-era ETH.
A large portion of funds will be staked to generate sustainable yield,and incident response.
The fund focuses on strengthening Ethereum mainnet and layer-2 security.
Grants will be distributed through DAO-style governance mechanisms.

Retail traders, who could benefit from fewer exploit-driven volatility events.
Long-term ETH holders, who gain from stronger security infrastructure.
Institutions, who may view this as a credibility boost for Ethereum’s risk framework.
Builders and ecosystem participants, who can access more funding for incident-response programs.
The broader crypto market, as it sets a precedent for converting legacy funds into public-good security spending.

🟢 Short term: Improved sentiment around Ethereum security and trust

🟡 Long term: Sustainable security endowment strengthens Ethereum and L2 resilience

🔴 Key risk: Governance, regulatory scrutiny, and execution quality of grants

Background and Context

The creation of TheDAO Security Fund is rooted in the significant appreciation of Ethereum assets that remained unclaimed after the 2016 DAO exploit. For nearly a decade, roughly 75,000 ETH stayed untouched in specific contracts. As a result, as Ethereum’s price rose over the years, the value of those funds increased substantially, reaching an estimated $220 million.

Supporters of the initiative argue that keeping these funds idle no longer serves the ecosystem. Instead, they believe the Ethereum network can benefit more by redirecting this capital toward long-term security improvements.

To understand why this matters, it helps to revisit the original DAO itself, which marked a landmark experiment in crypto governance. Launched in 2016 as a decentralized venture fund, it raised more than $150 million, making it one of the largest crowdfunding events at the time. However, soon after launch, attackers siphoned off a large amount of ETH. This event triggered intense debate and ultimately pushed Ethereum toward its historic hard fork.

Key milestones related to this development

EARLY 2016

The DAO launches

The DAO launches on Ethereum as a decentralized venture fund and rapidly becomes one of crypto’s biggest early experiments.

MID 2016

The DAO hack hits Ethereum

Attackers exploit a smart contract vulnerability and drain major ETH holdings, triggering a network-wide security crisis.

MID · LATE 2016

Ethereum hard fork reshapes the ecosystem

Ethereum executes a hard fork to address the hack aftermath, while Ethereum Classic continues as the original chain.

2016–2025

DAO-era ETH remains unclaimed

Roughly 75,000 ETH stays locked in legacy DAO-linked contracts, appreciating in value as ETH prices rise.

2025–2026

Repurposing discussions accelerate

Early Ethereum contributors and ecosystem stewards explore redirecting idle DAO-era ETH into long-term security funding.

2026

The DAO Security Fund announced

The Ethereum Foundation and Vitalik-backed contributors establish The DAO Security Fund as a security-focused endowment worth roughly $220M.

Details of TheDAO Security Fund

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TheDAO Security Fund will be financed using ETH sourced from two legacy contracts tied to the original DAO structure. To begin with, one portion comes from the Curator Multisig, which holds about 4,600 ETH.

Meanwhile, the larger share comes from the ExtraBalance contract, which contains approximately 70,500 ETH, valued at around $206.6 million. Notably, the fund will stake most of this ETH, which will create a recurring yield stream and support the fund over the long term.

In addition, the fund will prioritize Ethereum mainnet and layer-2 security, as well as infrastructure monitoring and educational initiatives. At the same time, it will explicitly exclude funding for EVM-compatible alternative layer-1 networks.

Potential Impact

By redirecting hundreds of millions of dollars into security, TheDAO Security Fund could materially strengthen Ethereum’s defense layer. Beyond the practical impact, this initiative also carries symbolic weight. Many community members view it as a form of redemption for The DAO’s legacy.

In doing so, it shows how Ethereum can learn from past failures and convert them into long-term advantages. Overall, the move signals a maturing ecosystem that treats security as foundational infrastructure rather than an afterthought.

Frequently Asked Questions

What is The DAO Security Fund?

The DAO Security Fund is an Ethereum-backed endowment that repurposes unclaimed DAO-era ETH to fund audits, bug bounties, incident response, and security research.

Why did Ethereum create this fund now?

Ethereum created the fund because the unclaimed ETH appreciated significantly, and ecosystem leaders chose to redirect dormant assets toward long-term Ethereum security improvements.

How much ETH is involved in the initiative?

The initiative involves roughly 75,000 ETH linked to the 2016 DAO incident, which is now valued at around $220 million based on ETH market prices.

Where will the fund source the ETH from?

The fund will source ETH primarily from legacy DAO-related holdings, including the Curator Multisig and the ExtraBalance contract.

How will the fund sustain itself long term?

The fund will stake a large portion of the ETH to generate recurring yield, which will support Ethereum security work continuously instead of relying on one-time grants.

What security areas will The DAO Security Fund support?

The fund will support Ethereum mainnet security, layer-2 security, infrastructure monitoring, user protection tooling, audits, incident response readiness, and security education.

Will the fund support other EVM-compatible layer-1 networks?

No. The fund will exclude EVM-compatible alternative layer-1 networks and will focus only on strengthening Ethereum and its scaling ecosystem.

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