The DAO was a digital decentralized autonomous organization and a form of investor-directed venture capital fund. After launching in April 2016 via a token sale, it became one of the largest crowdfunding campaigns in history, but it ceased activity after much of its funds - in the form of US$ exchanged for "Ether-crypto coins" - were taken in a hack in June 2016.

The DAO had an objective to provide a new decentralized business model for organizing both commercial and non-profit enterprises. It was instantiated on the Ethereum blockchain and had no conventional management structure or board of directors. The code of the DAO is open-source.

In June 2016, users exploited a vulnerability in The DAO code to enable them to siphon off one-third of The DAO's funds to a subsidiary account. The Ethereum community controversially decided to hard-fork the Ethereum blockchain to restore approximately all funds to the original contract. This split the Ethereum blockchain into two branches, each with its own cryptocurrency, where the original unforked blockchain continued as Ethereum Classic.

The open source computer code behind the organization was written principally by Christoph Jentzsch, and released publicly on GitHub, where other contributors added to and modified the code. Simon Jentzsch, Christoph Jentzsch's brother, was also involved in the venture.

The DAO was launched on 30 April 2016 with a website and a 28-day crowdsale to fund the organization.

The token sale had raised more than US$34 million by 10 May 2016, and more than US$50 million-worth of Ether (ETH)—the digital value token of the Ethereum network—by 12 May, and over US$100 million by 15 May 2016. On 17 May 2016, the largest investor in the DAO held less than 4% of all DAO tokens and the top 100 holders held just over 46% of all DAO tokens. The fund's Ether value as of 21 May 2016^([update]) was more than US$150 million, from more than 11,000 investors.

The DAO was a decentralized autonomous organization that exists as a set of contracts on the Ethereum blockchain, with no physical address or officials with formal authority. The theory underlying the DAO was that keeping operational power directly in the hands of owners, not delegated to managers, would ensure that invested funds would be used in the owners' best interests, thus solving the principal–agent problem.

As an on-chain organization, The DAO claimed to be completely transparent, since everything was done by the code which anyone could see and audit. However, the complexity of the code base and the rapid deployment of the DAO meant that neither the coders, the auditors, nor the owners could ensure the intended behavior of the organization, with the eventual attacker finding an unexpected loophole.

The DAO was intended to operate as "a hub that disperses funds (currently in Ether, the Ethereum value token) to projects". Investors receive voting rights by means of a digital share token; they vote on proposals submitted by contractors, and a group of curator volunteer make sure the projects are legal and the contractors properly identified before whitelisting them. The profits from an investment will flow back to their stakeholders as specified in an on-chain smart contract.

In May 2016, TechCrunch described The DAO as "a paradigm shift in the very idea of economic organization. ... It offers complete transparency, total shareholder control, unprecedented flexibility, and autonomous governance."

In May 2016, the plan called for The DAO to invest Ether into ventures. It would back contractors and receive in return "clear payment terms" from contractors. The organizers promoted The DAO as providing investors with a return on their investment via those "clear payment terms" and they warned investors that there was a "significant risk" that the ventures funded by them may fail.

The risks included unknown attack vectors and programming errors. Additional risks included the lack of legal precedents: it was unknown how governments and their regulatory agencies would treat The DAO's ventures and contracts. For example, legal systems might not acknowledge a corporate veil protecting investors from individual legal and financial liability for actions taken by The DAO and its contractors. It was unclear if The DAO was selling securities, which are highly regulated, and if so, what type of securities.

The DAO has a democratized organizational structure so that control can be spread among members, with no official leadership or regulation. Normally, there is no way to recover funds if a member mistakenly transfers cryptocurrency to the wrong wallet, including in case of fraud.