Authors: Colin Forward, Vikram Dhillon
It is safe to say that “DAOism” is well on its way to becoming a quasi-cyber-religion.
—Vitalik Buterin1
In Chapter 5, we discussed the concept of decentralized organizations and the modus operandi of a DAO.
Here, we want to highlight a historic moment leading to the creation of the first DAO, and how it eventually got hacked. Our discussion begins with a fresh perspective on decentralized organizations from Buterin, and leads into the story of Slock.it, the company at the heart of the DAO revolution. Then, we present some code that made The DAO dysfunctional: pieces of the smart contract relevant to the vulnerability, the conditions that allowed repetitive withdrawals from The DAO, and the exploit itself. We conclude the chapter by talking about the consequences of this hack: The debate about hard vs. soft forks, and the creation of Ethereum Classic.