The decentralised finance sector is reeling from an investor exodus after two major hacking incidents. Nearly $14bn has been pulled from DeFi protocols following a North Korean-linked attack that stole $290mn from Aave, the sector's largest lender, triggering an unprecedented industry bailout. Weeks earlier, hackers had stolen $280mn from DeFi exchange Drift.

The attacks dealt a severe blow to an industry that positioned itself as a safer, more transparent alternative to traditional finance. DeFi exploded during "DeFi summer" in 2020-2021, growing from under $1bn to roughly $180bn. The market has since shrunk to about $86bn, near its lowest point in a year. Aave's token fell 20% since the April hack and 50% over the past year, while Uniswap's token dropped roughly 34% year-over-year.

The bailout, coordinated by Ethereum co-founder Joseph Lubin, crypto billionaire Justin Sun, and firms including LayerZero and Mantle, saved Aave from up to $230mn in bad debts. Critics see the rescue as antithetical to DeFi's core promise. "These companies are feigning decentralisation," said Adam Morgan McCarthy of Kaiko. "It's realistically 12 to 20 men who have been in crypto for years who have a vested interest in keeping each other's projects alive."