JPMorgan Chase: Security vulnerabilities and stagnant growth weaken the attractiveness of DeFi to institutional investors.

JPMorgan Chase stated that ongoing security vulnerabilities and stagnant TVL growth are significantly weakening the appeal of decentralized finance (DeFi) to institutional investors. The KelpDAO incident resulted in the loss of approximately $20 billion in TVL within days, exposing systemic risks in cross-chain bridges and collateral mechanisms. Attackers minted uncollateralized rsETH and used it in lending protocols, ultimately triggering approximately $200 million in bad debt and creating a cascading effect across the DeFi ecosystem. Under the impact of these risk events, funds are rapidly flowing to stablecoins. Analysts suggest that, similar to traditional markets turning to cash for safe haven, crypto users are more inclined to hold more liquid assets such as USDT during periods of uncertainty. Furthermore, while DeFi's total value locked (TVL) has recovered somewhat in USD terms, it has remained largely flat in ETH terms, reflecting a lack of real growth momentum. JPMorgan Chase believes that security issues and structural vulnerabilities remain the core obstacles hindering the scaling and institutional adoption of DeFi. (CoinDesk)