took place in 2016 the DAO hack The incident was an event that shook the foundations of blockchain technology and caused major repercussions in the crypto world.

One of the biggest innovations of blockchain technology at the time Ethereumprovided an excellent platform for projects that could operate in a decentralized manner via smart contracts. However, the power of this innovative technology came with major risks.

Before we explain the story, let’s talk about what DAO is.

DAO “Decentralized autonomous organization” Abbreviation for the phrase. in Turkish “Decentralized autonomous organization” It means.

This organization, which we call The DAO, is actually built on smart contracts offered by Ethereum and is completely so It was a decentralized investment fund.

Although decentralized autonomous organizations later emerged in many different areas, it was first implemented in 2016. Christoph Jentzch The DAO, developed by him and his team, collected investors’ money into a pool and decided by voting how these funds would be used.

The project attracted a lot of attention in a short time and was much higher than expected. $150 million value of Ethereum was collected.

That event that changed the fate of the entire crypto world started on the morning of June 17, 2016.

A vulnerability in The DAO’s smart contracts was spotted by the attackers and the hackers took advantage of Ethereum’s programming language. Exploiting a bug in Solidity He performed an attack called a “reentrance attack”.

This attack allowed the attacker to lose approximately 100% of the funds in the DAO pool within a week. 60 million dollars He managed to capture it.

Once the attack was noticed, the Ethereum community quickly took action with a group called white hackers, using the method used by the attacker. had also tried to recover the money.

Kind of like that by hacking hackers We can also say that it is possible to access funds.

As a result of this battle, some of the money was recovered, but the amount recovered was quite small compared to the loss stayed.

Furthermore, the DAO has a decentralized structure. There was no way to unplug the plug and the attack was unstoppable.

Either the situation of both parties hacking each other would turn into a vicious circle, or an alternative solution would be found…

Stolen money for DAO participants and the Ethereum ecosystem a serious threat was forming.

The amount was so large that if the stolen Ethereum remained in the hands of hackers, this person would lose money on the Ethereum market. He would have great power.

To avoid this situation and get the money back, Ethereum leaders came up with a radical solution “hard fork” He came up with the idea of ​​(hard fork).

hard split, reversing the blockchain It meant erasing the effects of the hack and returning the stolen amount to the owners.

However, this decision was quite controversial as it contradicted the principle of ‘immutability’, one of the most fundamental principles of blockchain technology.

The majority within the community supported this solution and in July 2016 The Ethereum blockchain has been split in two.

The new chain was named Ethereum (ETH) and The stolen money was recovered.

However, a group opposed to this change chose to remain in the original chain, and in this chain Ethereum Classic (ETC) continued its existence under the name.

These two chains have followed different paths over time, with Ethereum gaining more and more support from developers and investors. Ethereum Classic is behind us.

The DAO hacking incident and hard fork decision became a major turning point in the crypto world.

In the post-hack period, the security and safety of blockchain technology on decentralization issues More serious discussions arose.

At the same time this event new safety standards and has led to more careful development processes for smart contracts.

One of the most important results is the ICO (Initial Coin Offering) It was the first explosion of the digital money supply that .

So the failure of The DAO actually brought about a significant change in the financing methods of crypto projects.

In addition Project financing through decentralized structures It also showed how risky it can be.

For this reason, projects that try to finance their projects with decentralized autonomous organizations turn to ICO (initial digital money offering) and use this method. made it popular.

While the ICO model allows projects to reach a faster and wider audience through token sales, this method also causes many problems over time. fraud and failed project laid the foundation.

In summary, although The DAO hack caused a major crisis for Ethereum in the short term, the decision to hard fork was a major turning point in Ethereum’s development process and Serious precautions must be taken regarding the security of the platform as long as.

As a result, this event brought about the world of blockchain It was a serious lesson. We can also say.

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