North Korean Hackers Contribute to Dramatic Decline of DeFi Projects
In a worrying trend for the decentralized finance (DeFi) sector, North Korean hackers, alongside the downfall of several on-chain projects, have resulted in a significant outflow of user assets from multiple blockchain ecosystems. Current data illustrates that numerous DeFi chains have experienced a staggering 90% reduction in total user deposits, exacerbated over the past few years and particularly since the previous crypto boom.
Severe Declines Across DeFi Ecosystems
According to research from DeFi analytics provider DefiLlama, there has been a notable decline in the total value locked (TVL) in many DeFi platforms. On-chain analyst 0xThoor has highlighted the Ethereum Virtual Machine-compatible blockchain Harmony as the blockchain suffering the most significant drop in TVL. Harmony, which launched its layer-1 mainnet in 2019, enjoyed a period of growth leading up to the 2021 crypto peak, reaching an all-time high TVL of over $1.4 billion in January 2022.
However, following a catastrophic event in June of the same year, when the North Korean hacker group Lazarus executed a breach on Harmony’s Horizon bridge, stealing $100 million, Harmony’s fortunes took a dramatic turn. The hack marked one of the largest incidents in DeFi history and initiated a continued decline in user deposits for the platform. By the time of this report, Harmony’s TVL had plummeted to just $1.7 million, reflecting a staggering 99% drop from its peak.
Widespread Impact on Other DeFi Projects
The ramifications of this trend are being felt across the broader DeFi landscape. Other notable projects, including Aurora, Moonrise, Canto, and Evmos, have also reported declines of at least 90% in their TVL figures. Even the widely used Layer 2 solution Polygon has seen a sharp decrease of 92%, as crypto assets deposited into the platform fell from $9.9 billion in 2021 to approximately $700 million in early 2025.
0xThoor recently tweeted a cautionary note, suggesting that many more DeFi projects may face similar declines in the coming years, indicating a troubling outlook for the industry.
Current State of the DeFi Market
As of now, the total TVL across the DeFi sector sits at a little over $106 billion. This marks a notable decrease from $175 billion observed in 2025, illustrating the challenging landscape for crypto projects. Despite the evident struggles, some analysts point towards potential bright spots on the horizon. Innovations and projects like Coinbase-incubated Base and new Bitcoin DeFi functionalities could play a pivotal role in rejuvenating the on-chain ecosystem as adoption trends evolve.
With the industry facing numerous challenges, it remains to be seen how these emerging technologies will influence future user engagement in the DeFi space and whether they can spur recovery amidst ongoing security concerns and shifting market dynamics. As the DeFi community grapples with these adversities, vigilance and innovation may become critical in reshaping the platform’s future.
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