JPMorgan has identified ongoing security vulnerabilities and stagnant total value locked (TVL) as factors diminishing institutional interest in decentralized finance (DeFi). A recent report highlights the KelpDAO exploit, which wiped out approximately $20 billion in TVL within days. Attackers minted $292 million in unsecured rsETH via a cross-chain bridge, using it as collateral to drain lending protocol funds, resulting in about $200 million in bad debt. The report notes that hacking losses this year are on par with 2025 levels, with infrastructure and cross-chain bridge vulnerabilities remaining significant risks. While DeFi's TVL has partially recovered in USD terms, it remains unchanged in ETH terms, indicating limited organic growth. Additionally, the report observes a shift of funds from DeFi lending to USDT, reflecting a continued investor preference for stablecoins during periods of stress.