One of the earliest decentralized projects was known as the DAO, or Decentralized Autonomous Organization. The DAO was meant to function as a VC fund of sorts for blockchain projects and was built so that people could buy a stake in the organization (and its profits) using Ethereum. The project itself was run using the Ethereum blockchain and smart contracts to control funds and manage voting. The project was a massive success, managing to raise about $250 million in funds at a time when Ethereum was trading for around $20.

Unfortunately, a flaw in the smart contract code used to operate the DAO resulted in a loophole that a hacker was able to exploit. Because of the subtle bugs in the smart contracts, the attacker was able to withdraw funds multiple times before balances would update. The hacker was then able to withdraw as much as they liked, quickly draining the DAO of tens of millions of dollars worth of ether. This hack radically affected the course of the Ethereum project by causing a hard fork—the majority of users voted to split the network and refund the stolen funds. The minority started Ethereum classic, where all the attackers, actions were allowed to stand. Both networks still operate independently.