Institutional interest in decentralized finance (DeFi) has surged, with adoption rising from 10% to 47% among hedge funds in just four years, projected to hit 65% by 2025. Major players like Goldman Sachs are exploring DeFi for bond issuance and yield farming. However, security exploits and regulatory uncertainties pose significant challenges, hindering institutional participation. Recent hacks have highlighted vulnerabilities in multisignature wallets and the risks of blind signing, which create hesitation for institutions to engage in DeFi. The user interface of DeFi platforms, often complex, must become more user-friendly to accommodate institutional investors. To foster trust, DeFi platforms need to demonstrate compliance with regulations and provide verifiable counterparties. The adoption of intent-based architecture can enhance security, minimizing risks such as MEV exploits and counterparty failures. With traditional financial firms already making strides in onchain finance, late adopters may struggle to keep pace due to increasing regulatory scrutiny. As institutions seek clearer standards, collaboration among regulators, developers, and institutions is crucial to shape a secure and compliant DeFi environment that appeals to larger players in the financial ecosystem.

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