Institutional investors are showing growing interest in decentralized finance (DeFi). The total value locked in DeFi has surpassed $100 billion, with institutional inflows rising 312% year-over-year, driven by high yields and blockchain's transparency. Major players like BlackRock, with its $550 million BUIDL fund, signal tokenized securities bridging traditional finance and DeFi. Firms such as State Street and Fidelity are also investing heavily, offering DeFi products. However, challenges like regulatory uncertainty, KYC/AML compliance, and security risks slow adoption. Despite these hurdles, DeFi's potential for efficiency and accessibility continues to attract institutions, with 47% more stablecoin flows to DeFi platforms this quarter. As regulatory frameworks evolve and Layer 2 solutions enhance scalability, institutional engagement is expected to deepen, reshaping DeFi's future.