Abstract: In this piece we revisit “The DAO” and the events following its failure. We analyse what happened to the various buckets of funds inside The DAO, on both sides of the chainsplit which it caused. We identify US$140 million of unclaimed funds still inside what is left of The DAO.
Key points
- The DAO hacker appears to control tokens worth approximately US$60 million.
- There are currently around US$140 million of unclaimed funds still inside The DAO withdrawal contracts.
- In June 2017, the US Dollar value of funds unclaimed inside The DAO was higher than the value of the amount initially raised in May 2016.
- A deadline is approaching, 10 January 2018, after which some of the funds, around US$26 million, may no longer be available to be claimed.
The DAO marketing material from May 2016
Source: DaoHub
Overview
In the early summer of 2016, one project generated a substantial amount of excitement and buzz in the crypto space, “The DAO”. DAO stands for Decentralized Autonomous Organization, and to the confusion of many, “The DAO” consumed that entire moniker for itself. The DAO was to be an autonomous investment fund, investing in projects determined by the token holders. The fund was to be governed by a “code is law” philosophy, as opposed to the centralized top down control mechanisms in traditional investment funds, where key individuals matter.
Many believed this novel approach would lead to superior investment returns. Although it is a unique and potentially interesting approach, in our view, expecting strong investment returns at this point may be somewhat naive.
The fund raised Ethereum tokens worth approximately US$150 million at the time, around 14% of all the ether in existence, with investors presumably expecting spectacular returns. The downside risk was expected to be minimal or zero, since one was supposed to be able to withdraw one’s Ethereum from The DAO, whenever one wished. In reality, doing so was a complex and error-prone process.