A recent $292 million exploit on April 18 has not deterred the DeFi sector, according to Standard Chartered, with the bank stating that it was 'shaken but not broken'. The incident began with an attack on KelpDAO, which then affected AAVE, the largest DeFi lender, as stolen tokens were used as collateral for borrowing other assets. This led to a sharp decline in liquidity, resulting in a 38% drop in deposits and a 31% decrease in active loans, mirroring a bank-run scenario.
Despite this, the bank maintains its outlook that tokenized real-world assets will reach a market capitalization of $2 trillion by the end of 2028, driven by the continued expansion of DeFi lending and stablecoin liquidity. In a report, Geoff Kendrick, head of digital assets research at Standard Chartered, wrote, 'We still expect tokenized real-world assets to reach a $2 trillion market cap by end-2028, up from $35 billion in October 2025.' The crypto industry continues to face risks from hacks and exploits, which can undermine trust in code-based systems. Bugs in smart contracts, phishing, and cross-chain bridge flaws can expose large pools of locked assets, where a single vulnerability can lead to significant losses. The complexity and interconnected nature of blockchain infrastructure amplify these risks, with cross-chain bridges expanding the attack surface and contributing to billions of dollars in losses due to intricate designs and weak validation.
Repeated exploits can erode confidence across the ecosystem, pushing users and institutions away, inviting stricter regulation, and slowing adoption, making security a key constraint on the growth of crypto. In response to the incident, AAVE and a coalition of DeFi firms committed over $300 million to stabilize the system, which helped normalize conditions, with yields easing and deposits recovering. The bank noted that the incident is accelerating structural upgrades, such as AAVE's V4 upgrade and the forthcoming Ethereum Economic Zone, aimed at reducing reliance on cross-chain bridges, a frequent target in major crypto hacks. Wall Street bank JPMorgan stated that hacks and stagnant capital levels in DeFi continue to hinder its institutional appeal, citing the $20 billion impact of the KelpDAO exploit.