Analyst: Repeated hacks could erode trust in DeFi

Repeated security incidents could cause existing DeFi players to lose trust, potentially relegating them to the role of a 'global proof-of-concept' for legacy financial institutions' blockchain adoption, analyst Hong Seong-wook of NH Investment & Securities warned in a report on April 30. He noted that the digital asset industry is rapidly experiencing the same types of incidents that the traditional financial sector faced over the last century. With RWA tokenization emerging as a growth driver, Hong suggested that one path to long-term growth for DeFi projects could be to actively cooperate with legacy firms to gain security and compliance expertise, or even to be acquired by them. The warning follows recent large-scale hacking incidents that exposed procedural vulnerabilities in major DeFi lending platform Aave and interoperability protocol LayerZero.