3 reasons why DeFi lags in development in institutions

Despite the total lockdown value reaching a record $130 billion, decentralized finance (DeFi) has struggled to regain the momentum of 2021-2022 and attract a large number of institutional adoptions. Although Aave leads with over $68 billion in total lock-in value, with Morpho and JustLend following, the space remains dominated by retail investors and crypto-native businesses. Key barriers include cross-chain interoperability issues, smart contract vulnerabilities (exactly proven by hacker attacks by 77% to $2 billion in 2025), and scalability restrictions. JPMorgan pointed out that institutions are progressing slowly and stressed that DeFi must improve regulation, increase transparency and reliability in order to align with traditional financial standards.