JPMorgan has highlighted ongoing security vulnerabilities in decentralized finance (DeFi) as a significant barrier to institutional adoption. According to NS3.AI, the bank pointed to the recent KelpDAO exploit, which resulted in a loss of approximately $20 billion in total value locked (TVL) within a few days. The attacker reportedly minted $292 million in unbacked rsETH, leaving around $200 million in bad debt across various lending protocols. Following the exploit, capital shifted from DeFi lending platforms to Tether's USDT, while ether-denominated TVL remained largely stable.