The long-term value of decentralized finance depends on its ability to transform the back-office operations of global banking institutions rather than providing alternative trading environments, according to asset management and banking executives speaking at the Proof of Talk conference in Paris.

Market Context

Legacy financial institutions have expressed strong interest in adopting blockchain technology for settlement, securities tokenization, and cross-border payments. However, persistent security vulnerabilities—particularly in bridge protocols that connect different blockchains—continue to create significant barriers to mainstream adoption. The tension between DeFi's promise of disintermediation and traditional finance's emphasis on regulated custody has emerged as a central theme in institutional crypto strategy.

Analysis

Maja Vujinovic, CEO of investment and advisory firm OGroup, emphasized that security remains the fundamental obstacle blocking DeFi growth beyond its current user base. "I don't think you see a growth in DeFi until we fix the first problem ... which is the hacks," Vujinovic stated during the Paris panel. She pointed specifically to bridge vulnerabilities as the critical weakness: "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."

Ben Nadereski, co-founder and CEO at Solstice—a Solana-based DeFi yield protocol—echoed these concerns in an interview with CoinDesk. He attributed the proliferation of exploits to developers prioritizing innovation over capital preservation, suggesting that the industry needs to recalibrate its approach to security before attracting institutional liquidity.

The security challenges are not merely theoretical. In April alone, breaches were reported on 27 out of 30 days—described by CertiK CEO Ronghui Gu as DeFi's worst month in four years. Drift Protocol and Kelp Dao suffered particularly damaging attacks attributed to North Korean cybercriminals, with the two exploits draining nearly $600 million from the lenders combined.

Traditional banks are actively working to address these structural gaps through regulated approaches. Stéphanie Cabossioras, chief strategy and global policy officer at Societe Generale Forge, highlighted the company's experience tokenizing structured products and green bonds on public blockchains. The effort required developing proprietary regulated stablecoins—including EURCV and USDCV—to solve cash settlement challenges that prevented seamless blockchain-based transactions.

"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," Cabossioras explained. She noted that institutional clients consistently prefer the safety guarantees of regulated banking relationships over open-source, non-custodial DeFi protocols: "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."

Franklin Templeton CEO Jenny Johnson offered an additional perspective on institutional hesitation, noting that blockchain and crypto threaten existing fee-based business models built on transaction intermediation. She cited the firm's tokenized money market fund Benji—running on the Stellar public network—as evidence that public blockchains can dramatically reduce operational costs compared to traditional infrastructure.

Key Numbers

- 27 out of 30 days in April experienced reported blockchain security breaches, marking DeFi's worst month in four years according to CertiK CEO Ronghui Gu

- Nearly $600 million drained from combined exploits targeting Drift Protocol and Kelp Dao by North Korean cybercriminals

- Number of bridge-related vulnerabilities cited as primary obstacle to institutional adoption by multiple executives at Proof of Talk conference

What to Watch

Industry stakeholders will monitor whether upcoming security protocols and bridge solutions can reduce exploit frequency sufficiently to satisfy institutional risk managers. The development trajectory of regulated stablecoins like Societe Generale Forge's EURCV and USDCV may serve as a model for bridging traditional finance and on-chain infrastructure. Conference proceedings from Proof of Talk suggest continued dialogue between DeFi developers and banking executives regarding standards for secure protocol design.