The DeFi sector has shown its ability to withstand significant challenges, following a $292 million cyber attack on April 18 that exposed systemic vulnerabilities. According to Standard Chartered, the sector was 'flexed but not fractured' by the attack, which occurred on KelpDAO and had a ripple effect on AAVE, the largest DeFi lender. The incident led to a sharp decline in liquidity, with deposits falling by approximately 38% and active loans decreasing by 31%, reminiscent of a bank run. Despite this, the bank expects the market capitalization of tokenized real-world assets to reach $2 trillion by the end of 2028, driven by continued growth in DeFi lending and stablecoin liquidity.

'We still expect tokenized real-world assets to reach a market capitalization of $2 trillion by the end of 2028, up from $35 billion in October 2025,' wrote Geoff Kendrick, head of digital assets research at Standard Chartered. The threat of hacks and exploits remains a significant risk in the crypto sector, undermining trust in systems that rely on code rather than intermediaries. Smart contract bugs, phishing, and cross-chain bridge flaws can expose large pools of locked assets, where a single vulnerability can trigger significant losses. The complexity and interconnected nature of blockchain infrastructure amplify these risks.

Cross-chain bridges, while expanding functionality, also increase the attack surface and have been responsible for billions of dollars in losses due to intricate designs, shared systems, and weak validation. Repeated exploits can erode confidence across the ecosystem, pushing users and institutions to the sidelines, inviting stricter regulation, and slowing adoption, making security a key constraint on the growth of crypto. In response to the attack, AAVE and a coalition of DeFi firms committed over $300 million to stabilize the system, which helped to normalize conditions, with yields easing and deposits recovering.

The incident is also accelerating structural upgrades, with AAVE's V4 upgrade and the forthcoming Ethereum Economic Zone aiming to reduce reliance on cross-chain bridges, a frequent target in major crypto hacks. Wall Street bank JPMorgan noted that hacks and stagnant capital levels in decentralized finance continue to weigh on DeFi's institutional appeal, highlighted by the $20 billion impact of the KelpDAO exploit.