DeFi won’t win over big banks until it fixes its hacking problem, executives say Lenders are particularly interested in blockchain’s back-office applications, but security failures are blocking wider adoption.
What to know: – Industry executives say DeFi’s long-term value lies in overhauling banks’ back-office operations rather than in speculative trading. – Institutional capital will remain sidelined, however, until DeFi addresses persistent security flaws. – Societe Generale said regulated banks can close these gaps with tokenized assets and bank-issued stablecoins, offering the safety and custody that mainstream clients demand
The long-term value of decentralized finance (DeFi) depends on its ability to transform the back-office operations of global banking institutions rather than providing alternative trading environments, according to asset management and banking executives. Speaking on a panel at the Proof of Talk conference in Paris, the executives said legacy financial institutions are eager to adopt blockchain technology, but that’s unlikely to occur given the weaknesses in onchain security, especially in bridges that link different blockchains. In April, breaches were reported in 27 out of 30 days, prompting CertiK CEO Ronghui Gu to describe it as DeFi’s worst month in four years.
Drift Protocol and Kelp Dao alone were hacked by North Korean cybercriminals in exploits that drained nearly $600 million from the two lenders. “I don’t think you see a growth in DeFi until we fix the first problem … which is the hacks,” said Maja Vujinovic, CEO of investment and advisory firm OGroup. “I think it’s an absolute problem until we solve the bridges. I don’t think that DeFi grows outside of the DeFi degen community … until they fix probably a whole stack.” Her comment echoed Ben Nadereski, co-founder and CEO at Solstice, a Solana-based DeFi yield protocol, who told CoinDesk in an interview that DeFi’s growth is being held back by the onslaught of exploits, a…