DeFi Security Incidents Raise Concerns Among Institutional Investors

The decentralized finance (DeFi) sector has been plagued by repeated security incidents, including bridge hacks, which are causing institutional investors to question the risks and returns of this type of investment.

According to a recent report by JPMorgan analysts, these attacks have cumulatively resulted in $328.6 million in losses, with eight major attacks targeting DeFi bridges in 2026 alone.

Misha Puchiatin, CEO of smart contract security firm StateMind and co-founder of the DeFi protocol Symbiotic, notes that modern DeFi is complex and interconnected, making it difficult for ordinary users to identify where the risks lie. He explains that even if a user only deposits ETH and does not use other tokens, they can still suffer losses due to a bridge breach linked to an unfamiliar token.

Yields in DeFi are also lower than those in traditional finance, with USDT offering an annual yield of up to 2.74 percent on the Ethereum market of Aave, compared to 3.57 percent on U.S. 3-month Treasury bills. This discrepancy is causing investors to reevaluate their interest in DeFi.