Following the KelpDAO incident, Curve Finance founder Michael Egorov has called for industry-wide safety standards in DeFi, arguing that the sector must move from reactive fixes to preventive design.
Egorov said recent onchain exploits have exposed a recurring weakness across decentralized finance: many systems marketed as decentralized still depend on centralized points of failure. In his view, critical dependencies should be distributed whenever possible. Where centralization cannot be fully removed, trust should be shared across multiple parties and supported by clearer best practices.
Beyond smart contract audits
According to Egorov, smart contract audits have become common practice in DeFi, but broader system design remains inconsistent. That includes how external components are configured, how critical dependencies are managed, and how protocols are verified from an overall risk perspective. He called on major ecosystem players, including the Ethereum Foundation and the Solana Foundation, to help coordinate shared guidelines that developers, auditors, and risk teams can follow.
His comments come at a time when DeFi infrastructure is facing greater scrutiny as the sector scales and draws more institutional attention. As more capital enters decentralized markets, tolerance for preventable failures is falling.
Investors say failures are part of the growth cycle
Not everyone in the industry sees incidents like the KelpDAO exploit as evidence of structural decline. Dragonfly managing partner Haseeb Qureshi said failures have long been part of DeFi’s development cycle. He pointed to earlier crises, including the Terra collapse, as examples of how the ecosystem has adapted over time. In his view, DeFi learns through mistakes, and the key question is whether such failures become fatal to the broader system.
Qureshi added that many protocols are now designed with safeguards such as overcollateralization and reserve buffers. These mechanisms can help platforms absorb isolated shocks without immediately triggering wider contagion. Losses may still be significant, but they are not necessarily existential for DeFi as a whole.
KelpDAO fallout sharpens the debate
The report also noted that the KelpDAO exploit drained more than $300 million and triggered outflows across lending markets, with DeFi total value locked declining by $14.17 billion across dozens of protocols. The episode has renewed debate over how the industry balances rapid innovation with stronger security discipline.
At the center of that debate is a broader question about maturity. One side argues that higher standards and deeper coordination are needed to reduce avoidable risk. The other sees periodic disruptions as part of the natural process of innovation and improvement. What is increasingly clear is that as more capital flows into DeFi, the market is becoming less willing to tolerate failures that could have been prevented.