Square peg, meet round hole

If you didn’t hear, there was a huge hack on The DAO a day or so ago. Sounds like they were able to split US$60-80MM from the parent (depending on value of ETH). That’s like a good 40% or so of total fund value. Already hearing hard fork on Ethereum which is kind of hypocritical but fascinating soap. ~27 days until the child DAO creation is complete and the exploited funds are available.

Though I feel bad for bag holders, the hacks were a forgone conclusion given the known vulnerabilities. I hope they come to an amicable solution without damaging ETH or losing too much, but we knew the first DAO would be painful. With the complexity of smart contracts, we should have known adding extra, unnecessary elements of difficulty, like say, running a for profit investment fund, could have come a bit later.

I don’t know why Slock.It and the community didn’t endeavor to make this non-profit from the start. It allows them to focus on the important questions with smaller stakes. To build in expectations of return for something so new, unprecedented, and risky was a bad move in foresight and hindsight. It opens questions that have nothing to do with the discussions we should be having about DAO. It is a distraction from the purpose of this experiment and the real innovation which has occurred.

Now they’re in over their head and they’ve damaged the reputation of themselves, of ETH, and possibly crypto at large. It’s a dev team managing a hedge fund… what did we think would happen? The play is and always was to let them figure out the code and fork it when it has been reasonably scrutinized and patched.

Don’t let a predictable botched execution get us down on one of the most incredible innovations and gifts to humanity (which we do owe to Slock.It). The ability of Slock.It’s DAO however, to generate profit for their stakeholders, should be secondary to developing a solid DAO framework that the rest of the world can get behind.

Time to get real and stop putting square pegs in round holes.

 

Aurie Philipchuk

Managing Partner @Tractai. Blockchain enthusiast. Jack of all trades. Interested in building the new generation of great companies? Let's connect.

 

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