A $285m crypto hack and falling rates rock DeFi world

Decentralised finance, once among the most dynamic corners of the digital-asset industry, is under pressure from almost every direction.

Yields on some of DeFi’s most popular lending products have fallen near that of a vanilla government bond. Activity across a slew of blockchain networks has slowed. A $285 million hack blamed on North Korean state-backed operatives has renewed doubts about the security of a sector that has spent years insisting it was maturing.

The lending market shows the strain. On Aave, the largest decentralized lending platform with around $26 billion in deposits, the rate on USDT — a widely used dollar-pegged token — has fallen to roughly 2.45%. With the Federal Reserve’s benchmark between 3.5% and 3.75%, even the most conservative traditional investments now offer more.

DeFi once attracted waves of speculative capital with double- and triple-digit yields. Now, with some of its most popular products paying less than a government bond — and security risks that could wipe out the principal overnight — it is a harder sell, even when more complex products can offer competitive returns.

“Squeezing 4% to 8% while risking your entire principal is looking very unattractive right now,” said Christine Fang, head of capital formation at crypto hedge fund Third Eye Capital. “Deals that ask to commit capital to lock in for at least a few months for yields even as much as 15% are also heavily scrutinized these days.” Her fund, she said, has turned down three such offers in the past month.

The falling yields reflect a double squeeze. Demand for crypto-based leveraged trading has collapsed, particularly after the market crash in October, meaning fewer borrowers and less interest income for lenders But the supply side has moved against them too. Stablecoin deposits have flooded into lending pools faster than borrowers have shown up to use them, pushing rates down mechanically.

The security picture has compounded the pressure. On April 1, hackers stole approximately $285 million from Drift, a derivatives exchange on the Solana blockchain, in what Drift later described as an attack six months in the making. The thieves posed as a legitimate trading firm, met Drift staff at industry conferences, deposited more than $1 million to build trust, and spent months embedded inside the project before striking. They compromised staff devices through malicious software disguised as a wallet app, and a shared code repository, then used the access to hijack the administrative controls that governed the platform’s funds.

On Thursday, Drift announced plans to relaunch after securing around $150 million in funding from a consortium led by Tether Holdings SA. As part of the agreement, Drift will use Tether’s stablecoin to finalize transactions at the settlement layer, replacing Circle Internet Group Inc.’s token.

Drift attributed the attack to a North Korean state-affiliated hacking group, an assessment echoed by blockchain analytics firms Elliptic and TRM Labs. North Korean hackers stole roughly $2 billion in cryptocurrency in 2025, according to Chainalysis. Weeks earlier, Balancer, one of older DeFi projects, announced its corporate entity Balancer Labs would shut down after a separate $128 million theft last year.

Still, the picture is not uniformly bleak. Decentralised-derivatives exchanges are taking more market share of global trading volume from their centralized peers, becoming a real competitor to giants such as Binance for the first time. On-chain adoption is maturing. The around $97 billion sector is not shrinking — but the parts that are growing and the parts that are hurting no longer look like the same business.

Much of the damage traces to the unwinding of the speculative frenzy that once powered smaller blockchain networks. The number of tokens that failed in 2025 surged to a record of more than 11 million, according to CoinGecko — driven partly by the explosive growth and subsequent collapse of memecoins, highly volatile tokens based on jokes and internet trends. The DeFi applications on these networks earned their fees from trading those tokens and their lending income from people borrowing against them. When the speculation stopped, the economics of the platforms that depended on it collapsed too.

The networks that have held up are those whose activity does not depend on that kind of betting. Hyperliquid, a blockchain built for perpetual futures — leveraged contracts with no expiry date that have become crypto’s most actively traded instrument — is booming because it has enabled trading in perpetual futures tied to real-world assets such as oil, silver, and the S&P 500 index.

Retail investors are “consolidating on the chains that actually have good products,” said Lucas Bruder, co-founder and chief executive of Jito Labs. “Solana and Hyperliquid are growing because they ship things people want to use. The rest is noise dying off.”

And then there is Wall Street. Franklin Templeton has begun offering investment funds on blockchain platforms through a partnership with Ondo Finance. Apollo Global Management has moved a private credit strategy onto the blockchain through Securitize. The value of traditional financial instruments repackaged as blockchain tokens has grown steadily.

Shiliang Tang, managing partner of Monarq Asset Management, said the industry is shifting away from speculative token strategies toward yield from credit, repo markets, and decentralized exchanges that trade real-world assets such as commodities and equities.

Put another way, a crypto community founded on eliminating intermediaries is now courting them — and the returns drawing institutional money come not from anything native to crypto but from Treasuries, private loans, and bank lending agreements available at any brokerage, repackaged on blockchain rails. It amounts to something close to an identity crisis: some of the sector’s most promising growth stories depend on the financial system it was built to make obsolete.

Within the industry, views differ on what institutional adoption is actually for.

“There’s one camp that wants institutions to come buy their tokens, buy their bags, make their prices go up,” said Tarun Chitra, chief executive of Gauntlet, a DeFi risk management firm. “For the larger camp, including us, nothing has changed. We want institutions to come with their own tokens and use systems that are designed around principles that level the playing field for everyone who wants to participate.”

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