Persistent exploits and stagnant growth keep DeFi out of reach for institutions, JPMorgan analysts said Wednesday after the $292 million Kelp DAO breach.
JPMorgan Report On Kelp DAO Hack
The bank's research team, led by managing director Nikolaos Panigirtzoglou, said the recent attack has already wiped roughly $20 billion from DeFi's total value locked in a matter of days.
The exploit hit a LayerZero-powered cross-chain bridge. An attacker minted $292 million in unbacked rsETH, then used the tokens as collateral on Aave to borrow real Ether (ETH).
Aave was left carrying an estimated $230 million in bad debt. LayerZero and outside researchers have linked the attack to North Korea's Lazarus Group.
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Tether Benefits From Flight To Safety
JPMorgan said the shock pushed users toward Tether's USDT (USDT), which offers deeper liquidity on centralized exchanges and a faster off-ramp during on-chain stress.
Growth in DeFi also remains weak when measured in ETH terms. In dollar terms, TVL has tracked the broader market. Adjusted for price, however, it has stayed largely flat since 2021.
The Kelp DAO incident caps a brutal stretch.
Combined DeFi losses this month have topped $600 million, including the $285 million Drift Protocol hack and smaller breaches at CoW Swap, Rhea Finance and Silo Finance.
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