# How Did the DAO Hack in 2016 Utilize a Reentrancy Attack? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

---

## How Did the DAO Hack in 2016 Utilize a Reentrancy Attack?

The DAO (Decentralized Autonomous Organization) was a complex smart contract that allowed users to withdraw their funds. The attacker exploited a reentrancy vulnerability in the withdrawal function.

The function sent Ether to the user's address before updating their internal token balance. The attacker's contract, upon receiving the Ether, used its fallback function to recursively call the withdrawal function again.

Because the DAO's internal balance had not yet been updated, it repeatedly sent Ether for the same initial request, allowing the attacker to drain millions of dollars worth of ETH.

- [How Does a Reentrancy Attack Relate to the DAO Hack?](https://learn.greeks.live/path/how-does-a-reentrancy-attack-relate-to-the-dao-hack/)

- [What Would Be the Vulnerable Code Structure That Violates the CEI Pattern?](https://learn.greeks.live/path/what-would-be-the-vulnerable-code-structure-that-violates-the-cei-pattern/)

- [Provide an Example of How Two Functions Might Share a State That Could Be Exploited](https://learn.greeks.live/path/provide-an-example-of-how-two-functions-might-share-a-state-that-could-be-exploited/)

- [Why Is Updating State before an External Call the Critical Part of the CEI Pattern?](https://learn.greeks.live/path/why-is-updating-state-before-an-external-call-the-critical-part-of-the-cei-pattern/)

- [What Specific Code Vulnerability in the DAO Contract Allowed the Reentrancy?](https://learn.greeks.live/path/what-specific-code-vulnerability-in-the-dao-contract-allowed-the-reentrancy/)

- [What Is a “Re-Entrancy Attack” in Smart Contracts?](https://learn.greeks.live/path/what-is-a-re-entrancy-attack-in-smart-contracts/)

- [What Is a Reentrancy Attack in Smart Contract Security?](https://learn.greeks.live/path/what-is-a-reentrancy-attack-in-smart-contract-security/)

- [How Did the Ethereum Community Respond to the DAO Hack?](https://learn.greeks.live/path/how-did-the-ethereum-community-respond-to-the-dao-hack/)

## Glossar

### [Reentrancy Vulnerability](https://learn.greeks.live/area/reentrancy-vulnerability/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Exploit ⎊ The reentrancy vulnerability, prevalent in smart contracts and increasingly relevant to options trading and financial derivatives, arises from a contract's ability to be recursively called before an external call completes, allowing malicious actors to repeatedly drain funds or manipulate state.

### [The Dao Hack](https://learn.greeks.live/area/the-dao-hack/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Event ⎊ The Dao Hack was a seminal security incident involving the exploitation of a reentrancy vulnerability in a decentralized autonomous organization's contract, resulting in the draining of a significant portion of its Ether holdings.

### [DAO Hack](https://learn.greeks.live/area/dao-hack/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Event ⎊ A security breach targeting a Decentralized Autonomous Organization, typically exploiting flaws in governance mechanisms or smart contract logic to illicitly transfer pooled assets.

### [DID](https://learn.greeks.live/area/did/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Attestation ⎊ Decentralized identifiers (DIDs) within cryptocurrency and financial derivatives represent a verifiable digital identity, moving beyond centralized authorities to establish trust through cryptographic proofs.

## Discover More

### [What Problem Did the ERC-1155 Standard Aim to Solve?](https://learn.greeks.live/path/what-problem-did-the-erc-1155-standard-aim-to-solve/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Problem Did the ERC-1155 Standard Aim to Solve?](https://learn.greeks.live/wp-content/uploads/2025/10/Geometric-Abstraction-Illustrating-Volatility-Skew-and-Implied-Term-Structure-in-Decentralized-Finance.webp)

Solved the inefficiency of deploying separate contracts for each token type (fungible/non-fungible) by unifying them into one contract.

### [What Is the Difference between a Preimage Attack and a Second Preimage Attack in Cryptography?](https://learn.greeks.live/path/what-is-the-difference-between-a-preimage-attack-and-a-second-preimage-attack-in-cryptography/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between a Preimage Attack and a Second Preimage Attack in Cryptography?](https://learn.greeks.live/wp-content/uploads/2025/10/Metallic-Trunk-Latch-Mechanism-Reflecting-Digital-Asset-Volatility-Under-Dark-Pool-Illumination.webp)

Preimage finds the original input from the hash; second preimage finds a different input with the same hash.

### [What Happened in the PlayStation 3 Hack Related to Nonce Reuse?](https://learn.greeks.live/path/what-happened-in-the-playstation-3-hack-related-to-nonce-reuse/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Happened in the PlayStation 3 Hack Related to Nonce Reuse?](https://learn.greeks.live/wp-content/uploads/2025/10/Dynamic-Trajectory-Visualization-of-Volatility-Skew-in-Structured-Crypto-Derivatives-Settlement.webp)

Sony's PS3 private key was compromised because the same nonce (k) was reused for multiple signatures, allowing the key to be calculated.

### [Why Did Regulators Push for Central Clearing of OTC Derivatives after the 2008 Financial Crisis?](https://learn.greeks.live/path/why-did-regulators-push-for-central-clearing-of-otc-derivatives-after-the-2008-financial-crisis/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Did Regulators Push for Central Clearing of OTC Derivatives after the 2008 Financial Crisis?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-Lattice-Bifurcation-in-Decentralized-Finance-Option-Hedging-Mechanisms.webp)

To reduce systemic risk, increase transparency, and standardize contracts after the massive bilateral risk exposure in 2008.

### [How Does a Decentralized Exchange (DEX) Utilize Smart Contracts for Derivatives Trading?](https://learn.greeks.live/path/how-does-a-decentralized-exchange-dex-utilize-smart-contracts-for-derivatives-trading/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Decentralized Exchange (DEX) Utilize Smart Contracts for Derivatives Trading?](https://learn.greeks.live/wp-content/uploads/2025/10/Transparent-Microfluidic-Apertures-Intersecting-Metallic-Conduit-Arrays-in-Decentralized-Finance-Protocols.webp)

Contracts automate order matching, risk management, and settlement, enabling non-custodial, transparent derivatives trading directly from user wallets.

### [How Do Market Makers Utilize Dedicated Low-Latency Connections (Like Cross-Connects) for RFQ Platforms?](https://learn.greeks.live/path/how-do-market-makers-utilize-dedicated-low-latency-connections-like-cross-connects-for-rfq-platforms/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Market Makers Utilize Dedicated Low-Latency Connections (Like Cross-Connects) for RFQ Platforms?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Mechanism-Visualization-Encasing-Complex-Digital-Asset-Derivates-Structures.webp)

Cross-connects are private, ultra-low latency fiber links used to ensure maximum speed for RFQ responses and higher fill rates.

### [What Is the Difference between a Preimage Attack and a Collision Attack in Hashing?](https://learn.greeks.live/path/what-is-the-difference-between-a-preimage-attack-and-a-collision-attack-in-hashing/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between a Preimage Attack and a Collision Attack in Hashing?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetrical-Bifurcation-of-Digital-Asset-Settlement-Mechanism-Crosshairs-in-Decoupled-Volatility-Surface-Mapping.webp)

Preimage finds the input for a known output; collision finds two different inputs that produce the same output.

### [Does a CEX Utilize a Mempool Concept, and If So, How Is It Different from a Blockchain Mempool?](https://learn.greeks.live/path/does-a-cex-utilize-a-mempool-concept-and-if-so-how-is-it-different-from-a-blockchain-mempool/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Does a CEX Utilize a Mempool Concept, and If So, How Is It Different from a Blockchain Mempool?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Machining-on-Blockchain-Infrastructure-Intersecting-Transparent-Option-Barrier-Structures.webp)

A CEX uses a private "order queue" that is inaccessible to the public, unlike a blockchain mempool, preventing external front-running.

### [Can a Decentralized Autonomous Organization (DAO) Be Held Liable for Market Manipulation?](https://learn.greeks.live/path/can-a-decentralized-autonomous-organization-dao-be-held-liable-for-market-manipulation/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Decentralized Autonomous Organization (DAO) Be Held Liable for Market Manipulation?](https://learn.greeks.live/wp-content/uploads/2025/10/Streamlined-Cryptographic-Asset-Custody-Encapsulation-Representing-Decentralized-Autonomous-Organization-Governance-Module.webp)

Liability is difficult due to lack of traditional legal structure, centralized management, and clear jurisdiction.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://learn.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Path",
            "item": "https://learn.greeks.live/path/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "How Did the DAO Hack in 2016 Utilize a Reentrancy Attack?",
            "item": "https://learn.greeks.live/path/how-did-the-dao-hack-in-2016-utilize-a-reentrancy-attack/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://learn.greeks.live/learn/how-did-the-dao-hack-in-2016-utilize-a-reentrancy-attack/"
    },
    "headline": "How Did the DAO Hack in 2016 Utilize a Reentrancy Attack? \u238a Path",
    "description": "The DAO's code sent Ether before updating the user's balance, allowing the attacker to recursively call the withdraw function to drain funds. \u238a Path",
    "url": "https://learn.greeks.live/learn/how-did-the-dao-hack-in-2016-utilize-a-reentrancy-attack/",
    "author": {
        "@type": "Person",
        "name": "Greeks.live",
        "url": "https://learn.greeks.live/author/greeks-live/"
    },
    "datePublished": "2025-12-04T18:21:27+00:00",
    "dateModified": "2025-12-04T18:21:27+00:00",
    "publisher": {
        "@type": "Organization",
        "name": "Greeks.live"
    },
    "articleSection": [
        "Path"
    ],
    "image": {
        "@type": "ImageObject",
        "url": "https://learn.greeks.live/wp-content/uploads/2025/10/Visualization-of-Asymmetric-Volatility-Surface-Dynamics-in-Decentralized-Derivatives-Exchanges.jpg",
        "caption": "This abstract visualization depicts overlapping, multi-hued planar elements radiating outward from a dark central hub against a pure black background. The forms suggest dynamic, rotational motion and interaction, specifically referencing complex mathematical structures within sophisticated financial modeling. This visual metaphor encapsulates the non-linear payoff structures inherent in high-leverage cryptocurrency options trading environments. The differing opacities highlight variance in relative exposure or counterparty risk within decentralized autonomous organization controlled protocols. Specifically, this represents the instantaneous mapping of implied volatility surfaces for Bitcoin futures or Ether options, where skew and kurtosis dictate premium valuations. Expert consideration demands recognition of this structure as a potential representation of exotic derivatives pricing methodologies or dynamic automated market maker curve adjustments. The contrasting blue-green and gray lobes visualize asymmetric risk profiles, critical for understanding portfolio Greeks management and navigating sudden market microstructure fragmentation in regulated versus non-custodial digital asset venues."
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://learn.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://learn.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebPage",
    "@id": "https://learn.greeks.live/path/how-did-the-dao-hack-in-2016-utilize-a-reentrancy-attack/",
    "mentions": [
        {
            "@type": "DefinedTerm",
            "name": "Reentrancy Vulnerability",
            "url": "https://learn.greeks.live/area/reentrancy-vulnerability/",
            "description": "Exploit \u238a The reentrancy vulnerability, prevalent in smart contracts and increasingly relevant to options trading and financial derivatives, arises from a contract's ability to be recursively called before an external call completes, allowing malicious actors to repeatedly drain funds or manipulate state."
        },
        {
            "@type": "DefinedTerm",
            "name": "The Dao Hack",
            "url": "https://learn.greeks.live/area/the-dao-hack/",
            "description": "Event \u238a The Dao Hack was a seminal security incident involving the exploitation of a reentrancy vulnerability in a decentralized autonomous organization's contract, resulting in the draining of a significant portion of its Ether holdings."
        },
        {
            "@type": "DefinedTerm",
            "name": "DAO Hack",
            "url": "https://learn.greeks.live/area/dao-hack/",
            "description": "Event \u238a A security breach targeting a Decentralized Autonomous Organization, typically exploiting flaws in governance mechanisms or smart contract logic to illicitly transfer pooled assets."
        },
        {
            "@type": "DefinedTerm",
            "name": "DID",
            "url": "https://learn.greeks.live/area/did/",
            "description": "Attestation \u238a Decentralized identifiers (DIDs) within cryptocurrency and financial derivatives represent a verifiable digital identity, moving beyond centralized authorities to establish trust through cryptographic proofs."
        }
    ]
}
```


---

**Original URL:** https://learn.greeks.live/learn/how-did-the-dao-hack-in-2016-utilize-a-reentrancy-attack/
