Decentralized finance on Ethereum showed resilience after a $292 million exploit triggered a bank-run dynamic on the AAVE protocol, with investment bank Standard Chartered maintaining its $2 trillion forecast for the tokenized real-world asset market.
"We still project that tokenised real-world assets (RWAs) will reach a market cap of $2 trillion by end-2028, up from $35 billion in October 2025," Geoff Kendrick, head of digital assets research at Standard Chartered, said in a Wednesday report.
The April 18 attack on KelpDAO cascaded into AAVE, the largest DeFi lender, after stolen assets were used as collateral. The event sparked a severe liquidity crunch, with AAVE deposits falling by roughly 38% and active loans by 31%. In response, a coalition of DeFi firms led by AAVE committed more than $300 million to stabilize liquidity and normalize yields.
The incident, which JPMorgan estimated caused a $20 billion hit to the sector, highlights the systemic risks in DeFi, particularly from complex cross-chain bridges. The episode is now accelerating structural upgrades, including AAVE’s V4 and the forthcoming Ethereum Economic Zone, aimed at improving security and bolstering institutional confidence.
Hacks and exploits remain a core risk in the crypto sector, where smart contract bugs and cross-chain bridge vulnerabilities can expose large pools of assets to single points of failure. The interconnected nature of DeFi protocols means a flaw in one system, like the KelpDAO exploit, can trigger contagion across the ecosystem. Cross-chain bridges have been a frequent target, accounting for billions in losses.
Despite the shock, the rapid industry-led backstop is being viewed as a sign of the sector's growing maturity. The intervention helped stabilize AAVE, with deposits recovering and yields easing from their highs, according to the bank's analysis.
Still, the event underscores the challenges DeFi faces in attracting institutional capital. In a separate note, Wall Street bank JPMorgan said persistent security flaws and stagnant capital levels continue to weigh on DeFi’s institutional appeal, citing the KelpDAO incident as a key example.
This article is for informational purposes only and does not constitute investment advice.
