Ethereum’s infamous DAO hack from 2016 is being transformed into a long-term security asset, as $220 million worth of unclaimed ETH is repurposed into a new decentralized security fund.
Key Takeaways
- Around 75,000 ETH, linked to the 2016 DAO hack, will fund Ethereum security projects.
- 69,420 ETH will be staked, generating approximately $8 million annually for grants.
- Governance will follow DAO-style mechanisms like quadratic and retroactive funding.
- The move marks a symbolic and practical return to DAO coordination nearly 10 years later.
What Happened?
A group of early Ethereum contributors, including Vitalik Buterin and Griff Green, have launched a major security initiative repurposing 2016 DAO hack funds. The new project, dubbed The DAO Fund, will turn unclaimed assets into a renewable funding source for Ethereum security and governance.
EXCLUSIVE 🚨
— Laura Shin (@laurashin) January 29, 2026
Nearly 10 years after the DAO hack, unclaimed ETH is being used to create a $250M Ethereum security fund.https://t.co/JTgHPOAblZ
Ethereum’s Biggest Hack Now Fuels Its Defense
In 2016, The DAO was a groundbreaking but flawed experiment in decentralized governance. Built on Ethereum, it attracted one of the largest crowdsales in crypto history, raising over $150 million. Just months later, a bug in its smart contracts allowed a hacker to drain around $60 million in ETH, shaking the network’s foundations.
The Ethereum community was divided on how to respond. A hard fork was implemented to roll back the damage, but not all users agreed, leading to the creation of Ethereum Classic. Despite the fork, tens of thousands of ETH remained unclaimed, either due to user error, lost keys, or overlooked claims.
Today, those dormant assets have grown in value and are now being reintegrated into the ecosystem as a proactive solution rather than a lingering problem.
Fund Breakdown and Structure
The $220 million security fund will be sourced from two main pools:
- ExtraBalance Pool: About 70,500 ETH remained from DAO investors who paid above the 1 ETH per 100 DAO token cap. These excess funds were unclaimed after the hard fork.
- Curator Multisig Wallet: Holds roughly 4,600 ETH, originally collected from DAO tokens stuck in faulty contracts.
Out of this, 69,420 ETH will be staked, creating a yield-based endowment expected to return $8 million per year in staking rewards. This yield will be distributed to Ethereum security initiatives on a recurring basis.
How the Grants Will Be Distributed?
Grants will be allocated through DAO-native governance tools, giving the community direct involvement. The distribution methods include:
- Quadratic funding to support broad-based community projects.
- Retroactive funding for completed and impactful security work.
- Ranked-choice RFP voting to prioritize proposals based on collective preferences.
Eligibility will be managed by the Ethereum Foundation, with operational help from public goods group Giveth, co-founded by Griff Green. Open applications will allow external operators to participate, ensuring transparency and minimizing centralization risks.
A Symbolic Revival for TheDAO
Nearly a decade after TheDAO’s collapse fractured the Ethereum community, its remaining assets are being used to strengthen the very thing it once put at risk: Ethereum’s security culture. As Griff Green noted, the DAO hack catalyzed Ethereum’s audit industry and changed how the ecosystem views smart contract safety.
Green said on the Unchained podcast:
With Ethereum now securing hundreds of billions of dollars, the timing of this initiative highlights the importance of long-term investment in protocol safety and user protection.
CoinLaw’s Takeaway
In my experience, crypto rarely gets a second chance to right a wrong. But this is one of those rare times. Taking unclaimed funds from Ethereum’s most infamous hack and turning them into a perpetual, DAO-governed security endowment is both poetic and practical. I find it inspiring that the same community that once split over a crisis is now uniting to build a safer future using the very assets that caused so much division. This is crypto maturity in action.
