Key figures in Ethereum, including its founder Vitalik Butelin, relaunched The DAO with an estimated security fund of $220 to $250 million. The initiative redirects a large portion of ETH that has been dormant since The DAO hack in 2016 and channels it into a long-term security endowment and grant program.
Key figures in Ethereum, including Vitalik Buterin, relaunched The DAO with a security fund utilizing approximately 70,500 ETH that remained unclaimed after the network’s original exploit. The launch plan involves splitting the resources between immediate grants and a staked endowment fund.
About $13.5 million has been allocated to security grants, which will be administered under a newly created entity called The DAO Fund. The grantmaking process will utilize decentralized mechanisms such as quadratic funding, retroactive public goods funding, and requests for proposals with first-order selection to choose the recipients.
In addition to this $13.5 million, an estimated 69,420 ETH remain, which will be used to create a perpetual endowment fund with a projected annual return of approximately $8 million at current rates. This return is intended to fund ongoing security work, rather than relying on episodic fundraising campaigns. These design decisions emphasize community participation and performance-based reward models.
The market repercussions following the launch of The DAO
The market reacted immediately to the announcement, with a significant amount of unused ETH being activated to generate returns. Staking 69,420 ETH transforms idle capital into a continuous income stream for security work, potentially influencing narratives about the economics of staking and the long-term funding of public goods.
However, there is some risk that traders and institutions are considering, as the complexity of governance increases the potential for capture or inefficient allocations if participation is low. Some vulnerabilities in the smart contracts or operations within the new fund could recreate the very exposure the effort seeks to eliminate.
Investors and risk managers are likely to closely monitor how The DAO Fund’s grant processes operate in the coming months and whether the governance design can deliver transparent and measurable security outcomes.
