The decentralized finance sector has shown it can withstand significant challenges after a $292 million hack on April 18 exposed vulnerabilities, according to Standard Chartered. The attack on KelpDAO had a ripple effect on AAVE, the largest DeFi lender, as stolen tokens were used to borrow other assets, triggering a sharp liquidity crisis.
This led to a 38% decline in deposits and a 31% drop in active loans, similar to a bank run. However, the bank remains optimistic about the growth of tokenized real-world assets, expecting them to reach a $2 trillion market cap by the end of 2028, driven by DeFi lending and stablecoin liquidity. The head of digital assets research at Standard Chartered, Geoff Kendrick, noted, "We still expect tokenized real-world assets to reach a market cap of $2 trillion by the end of 2028, up from $35 billion in October 2025." Hacks and exploits remain a significant risk in the crypto space, undermining trust in code-based systems. The complexity of blockchain infrastructure amplifies these risks, with cross-chain bridges being particularly vulnerable.
Repeated exploits can erode confidence, push users away, and lead to tighter regulation, making security a key factor in crypto's growth. In response to the hack, AAVE and other DeFi firms committed over $300 million to stabilize the system, which helped normalize conditions. The incident is also driving structural upgrades, such as AAVE's V4 upgrade and the forthcoming Ethereum Economic Zone, aimed at reducing reliance on cross-chain bridges. Meanwhile, JPMorgan notes that persistent security flaws and stagnant capital levels continue to hinder DeFi's appeal to institutions, following a $20 billion hit from the KelpDAO exploit.