DeFi must solve hacking problem to win over big banks, executives say

Decentralized finance will not win over large banking institutions until it fixes its persistent security vulnerabilities, particularly in cross-chain bridges, according to asset management and banking executives speaking at the Proof of Talk conference in Paris.

The executives said legacy financial institutions are eager to adopt blockchain technology for back-office operations, but the frequent hacks in DeFi remain a major barrier. In April, breaches were reported on 27 out of 30 days, with CertiK CEO Ronghui Gu calling it DeFi's worst month in four years. Incidents involving Drift Protocol and Kel were among those cited.

For crypto traders, the security concerns highlight the risks of holding assets in DeFi protocols, especially those relying on bridges. While the technology promises efficiency gains, the current hacking environment undermines trust. Traders can monitor on-chain activity and security incidents via NowPrice's live crypto dashboard to stay informed.

The path forward for DeFi adoption by traditional finance depends on robust security solutions. Executives emphasized that without significant improvements in on-chain security, especially for bridges, institutional adoption will remain limited. The industry will be watching for developments in cross-chain security protocols and potential regulatory frameworks that could address these vulnerabilities.