Security vulnerabilities in blockchain bridges remain the primary barrier to institutional capital entering decentralized finance
Institutional adoption of decentralized finance hinges on resolving persistent security vulnerabilities, particularly in blockchain bridges, before legacy financial institutions will integrate blockchain technology into back-office operations, according to banking and asset management executives speaking at the Proof of Talk conference in Paris on June 2.
The consensus among panelists was stark. “I don’t think you see a growth in DeFi until we fix the first problem, which is the hacks,” said Maja Vujinovic, CEO of OGroup, an investment and advisory firm. “I think it’s an absolute problem until we solve the bridges. I don’t think that DeFi grows outside of the DeFi degen community until they fix probably a whole stack.”
The timing of these remarks reflects an acute crisis in DeFi security. In April 2026, breaches were reported on 27 out of 30 days, marking what Ronghui Gu, CEO of security firm CertiK, described as DeFi’s worst month in four years. Drift Protocol and Kelp Dao, both lenders, were hacked by North Korean cybercriminals, who drained nearly $600 million combined from the two platforms.
Ben Nadereski, co-founder and CEO of Solstice, a Solana-based DeFi yield protocol, attributed the stagnation in DeFi growth to developers building innovative code without adequate attention to capital management responsibilities, allowing exploits to proliferate.
The institutional preference for regulated custody over open-source protocols has prompted traditional finance to develop alternative on-chain infrastructure. Societe Generale, through its tokenization division Societe Generale Forge, has tokenized structured products and green bonds on public blockchains and issued regulated stablecoins, EURCV and USDCV, to address cash settlement gaps that currently prevent seamless institutional participation.
Stéphanie Cabossioras, chief strategy and global policy officer at Societe Generale Forge, explained the rationale. “At the end of the day, we were stuck because there was only the securities leg on the blockchain, and we had no cash leg on the blockchain. That’s why we started to issue a stablecoin,” she said.
Cabossioras emphasized that institutional clients remain fundamentally risk-averse regarding custody arrangements. “In everyday life, anybody—individual, medium, or large enterprise—we want to have a trusted party. We don’t want to keep our assets in our private wallets, in our safes at home. We want to delegate this peace of mind to a third party. And that’s why custodians or banks still have a future,” she said.
The strategic implication is clear: DeFi’s long-term value to institutional capital lies not in creating alternative trading environments but in transforming the back-office operations of global banking institutions. Until bridge security and on-chain custody standards meet institutional risk thresholds, legacy financial institutions will continue to explore blockchain integration through bank-issued stablecoins and regulated tokenization platforms rather than open DeFi protocols.
