Ethereum turns unclaimed DAO hack funds into $220M security endowment

Ethereum is repurposing unclaimed funds from the infamous 2016 DAO hack to establish a roughly $220 million endowment aimed at strengthening security across the ecosystem.

The initiative, called the DAO Security Fund, will direct capital toward audits, infrastructure, incident response, and user protection as Ethereum scales.

The DAO hack, in which an attacker siphoned about 4.5% of all $ETH in circulation at the time, triggered Ethereum’s first major crisis and led to the hard fork that split the network into Ethereum and Ethereum Classic. Nearly a decade later, funds that were originally set aside for edge case refunds are being put to work to improve network security.

The endowment will be funded primarily by about 70,500 $ETH from an unclaimed ExtraBalance withdrawal contract, worth roughly $206 million, and around 4,600 $ETH and DAO tokens held in a curator multisig, valued at about $13.5 million. Most of the $ETH will be staked, generating an estimated $8 million in annual yield to support ongoing security efforts.

Funding will be distributed through DAO-based mechanisms, including quadratic funding, retroactive grants, and ranked choice voting, with the Ethereum Foundation setting eligibility criteria for each round. The grants are expected to support work across Ethereum mainnet, layer 2 networks, smart contracts, incident response, infrastructure, and user protection.

Griff Green, a former DAO curator and member of the white hat group that helped recover funds after the hack, said the goal is to redirect long-dormant capital toward making Ethereum safer as the network supports increasingly large amounts of value.

The DAO Security Fund is also part of the Ethereum Foundation’s broader Trillion Dollar Security initiative, reflecting growing concern over phishing attacks, wallet drains, and operational risks as Ethereum matures into a global financial layer.