Institutions are starting to ask whether the risks in decentralized finance are worth the shrinking returns, according to a key figure at the infrastructure startup Symbiotic. The warning comes as so-called bridge hacks keep piling up and yields that once lured big money into DeFi continue to slide.
The view from Symbiotic
Putiatin, a person close to Symbiotic, told GFdaily that institutions are increasingly questioning the risk-reward balance in DeFi. Repeated exploits targeting cross-chain bridges — the plumbing that lets tokens move between blockchains — have shaken confidence. At the same time, yields on many lending protocols and liquidity pools have dropped from the eye-popping levels that first drew institutional attention.
“Institutions are questioning whether DeFi’s risks justify returns,” Putiatin said, according to the information provided to this reporter. The statement captures a mood shift that has been building for months.
Bridge exploits: the weak link
Bridge hacks have become the most visible threat in DeFi. When a bridge is compromised, millions — sometimes hundreds of millions — of dollars in user funds can vanish in minutes. The pattern is familiar: a flaw in the smart contract code, a flash loan attack, or a manipulated oracle. Each incident reinforces the perception that DeFi remains a high-risk environment, especially for institutions that answer to regulators and investors.
Putiatin’s observation suggests that the cumulative effect of these exploits, rather than any single hack, is driving the reassessment. Institutions that once saw DeFi as a way to earn uncorrelated returns are now weighing operational security and insurance costs against shrinking payouts.
Yields that no longer dazzle
High yields were DeFi’s original draw. Early protocols could offer double-digit percentage returns on stablecoins, attracting yield-hungry funds. But as more capital piled in and competition grew, rates compressed. Today, many blue-chip DeFi lending markets yield single-digit returns that barely beat traditional fixed-income products, especially after factoring in gas fees and the risk of smart-contract bugs.
The combination of persistent security risks and lower yields creates a squeeze. Institutions that can get similar or better returns from regulated products — with deposit insurance or clearer legal recourse — are starting to drift away. Putiatin’s remark hints that this drift may accelerate if another major bridge exploit hits the headlines.
The question now is whether DeFi can fix its bridge problem and restore yield premiums before institutional interest fades further. No one at Symbiotic has offered a timeline or a specific fix. The market, for now, is watching.
