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IRC was created by Jarkko Oikarinen in August 1988 to replace a program called MUT (Multi User Talk) on a BBS called Oulu Box at the University of Oulu in Finland, where he was working at the Department of Information Processing Science.
History showed most servers and users went with EFnet.
Once ANet disbanded, the name EFnet became meaningless, and once again it was the one and only IRC network.
In Europe and Canada a separate new network was being worked on and in December the French servers connected to the Canadian ones, and in the end of the month, the French and Canadian network was connected to the US one and the network that later came to be called "The Undernet" was born.
The "undernetters" wanted to take ircd further in an attempt to make it less bandwidth consumptive and to try to sort out the channel chaos (netsplits and takeovers) that EFnet started to suffer from.
Dalnet ircd modifications were made by Alexei "Lefler" Kosut.
Dalnet was thus based on the undernet ircd server, although the dalnet pioneers were EFnet abandoners.
Jyrki Kuoppala pushed Jarkko to ask Oulu University to free the IRC code so that it also could be run outside of Oulu, and after they finally got it released, Jyrki Kuoppala immediately installed another server. Jarkko got some friends at the Helsinki University and Tampere University to start running IRC servers when his number of users increased and other universities soon followed.
At this time Jarkko realized that the rest of the BBS features probably wouldn't fit in his program.
According to James Ng the initial dalnet people were "ops in #Star Trek sick from the constant splits/lags/takeovers/etc".