JPMorgan diagnosed that hacking and capital stagnation hinder the institutional investment appeal of DeFi. According to CoinDesk, JPMorgan stated, "The $20 billion loss from the KelpDAO hack highlighted DeFi's systemic risks. Hacking and exploitation are core risk factors in cryptocurrency systems. This is because it directly undermines trust in systems that rely on code rather than intermediaries. Even a single vulnerability can cause massive losses. Despite improvements in smart contract auditing capabilities, infrastructure and bridge vulnerabilities remain major issues." It explained, "In such a situation, investors are moving funds into stablecoins. Especially after this hacking incident, as DeFi lending funds flowed into Tether (USDT), which has abundant liquidity and fast withdrawals, its preference as a safe-haven asset has further increased."
