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A new report by US-based financial giant JPMorgan Chase, a company that has been published in the world, says “The cyberattack linked to KelpDAO significantly disrupted the decentralized finance (DeFi) ecosystem.” In a few days, the total value locked (TVL) on DeFi platforms dropped by around $20 billion in just’very few weeks’ after the incident, bank analysts said.
The report was written by a team of analysts led by Nikolaos Panigirtzoglou, who headed the report. The analysts added that the continued vulnerabilities and slow growth in the DeFi industry still stifling institutional investor interest are continuing to limit institutional investors’ attention.
A security vulnerability in the cross-chain bridge is said to have been a reason behind the attack that was believed to be an issue with . As a result, attackers created around $292 million worth of un collateralized rsETH tokens through this vulnerability and used these token to borrow real $ETH via Aave. This led to about $230 million in uncollectible debt from this process.
The effects of this incident were not just the assets directly targeted, analysts said. But this incident showed that the highly connected nature of the DeFi ecosystem can be a barrier during stress,’ they said. The attack is linked to the North Korea-linked Lazarus Group, which has been identified by LayerZero and security researchers. Some of the seized money was said to have been frozen, while the rest is still being transferred between different wallets, it has been reported by .
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A scale of 2026 hacks and security breaches in the crypto industry is expected to be similar, JPMorgan said. While progress has been made in smart contract oversight, significant risks (especially cross-chain bridge security) remain.
Similarly, it was also noted that DeFi growth did not improve when evaluated for $ETH. A trend parallel to the overall crypto market was observed in US dollars by TVL (which grew rapidly after 2021; an decline in 2022, and a short-term recovery later), while the price-based $ETH–based televisionL continued flat.
Also, the report noted that “the recent attacks have shifted investor behavior significantly” following the latest attacks. While traditional markets tend to be cash-oriented during periods of uncertainty, a similar trend in DeFi has been seen as’moving towards stablecoins’.
Tether ($USDT), in this context, has been a “safe haven” because it is very liquid on centralized exchanges and can exit faster during stress periods. Yet analysts also noted that this heightened demand is still not yet fully expressed in $USDT’s total market capitalization.
*This is not investment advice.
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