1. What is DAO?
DAO stand for distributed autonomous organizations and is another computer code through which a set of smart contracts are connected together and function as a governance mechanism distributed autonomous organizations. The idea of the DOA from Slock.it was, that funds raised from the investors (i.e. the token holders) are pooled. Token holders can become contractors by submitting proposals for funding of their project by using the DAO funds. Any Ether generated from the proposals funded by the DAO would be returned to participating investors as rewards.
2. What function had the vulnerability?
The infamous split function had the vulnerability. The attacker(s) managed to recursively call the split function and retrieved their funds multiple times before getting to the step where the code would check the balance.
3. Why was the hard fork initiated?
On 22 June, a voting started on biggest mining pools regarding a response to the hack. First the majority agreed on a soft-fork, but due to additional security flaws it would pose this solution was discarded. Then they proposed a hard fork, which then was voted and accepted by majority of the Ethereum community. The Ethereum hard fork did not prevent all participants from following the old main branch, so the old branch continued to run and was then renamed âEthereum Classicâ as the original name âEthereumâ was adopted by the majority of participants for the new branch.