JPMorgan: Security vulnerabilities and growth stagnation weaken DeFi institutions' appeal

ME News report, April 23 (UTC+8): JPMorgan Chase said that ongoing security vulnerabilities and stalled TVL growth are significantly weakening decentralized finance (DeFi)’s appeal to institutional investors. The KelpDAO incident led to the evaporation of roughly $20 billion in TVL within days, exposing systemic risks in cross-chain bridges and collateral mechanisms. The attackers minted uncollateralized rsETH and used it in lending protocols, ultimately resulting in about $200 million in bad debt and triggering knock-on effects across the DeFi ecosystem. Under the impact of these risk events, capital is accelerating into stablecoins. Analysts say that, similar to how traditional markets rotate into cash as a hedge during uncertainty, crypto users are more inclined to hold more liquid assets such as USDT in uncertain periods. In addition, although the total value locked (TVL) in DeFi has recovered in USD terms, it is essentially flat when measured in ETH, reflecting a lack of real growth momentum. JPMorgan Chase believes that security issues and structural vulnerabilities remain the core obstacles limiting DeFi’s scaling and institutional adoption. (Source: ODAILY)