Safeguarding DeFi Infrastructure Builders: A Call to Action

Welcome to Crypto Long & Short, our institutional newsletter. This week, we explore the need to shield the individuals building DeFi infrastructure. Alexandra Levis shares expert insights, while Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the importance of safeguarding the people behind DeFi. As traditional finance companies increasingly embrace DeFi, it's crucial to protect the open-source, permissionless, and programmable technology that underpins it. The DeFi Education Fund invites you to join them in defending key policy objectives, including shielding software developers from misclassification under criminal code. Recent discussions with Congressional leaders have been productive, with a focus on building legislation that understands neutral, decentralized technology. For instance, the bipartisan Promoting Innovation in Blockchain Development Act aims to protect software developers who write code but do not control customer assets. In a related commentary, Alexis Sirkia, chairman and co-founder of Yellow Network, argues that Ethereum's scaling issues stem from a flawed assumption that the limitation is throughput, rather than the movement of value between participants. He suggests that state channels, which enable peer-to-peer transactions off-chain, could provide a solution. Meanwhile, the CFTC is set to approve the first US framework for perpetual futures, which will significantly impact the derivatives market. Other highlights include the devastating effects of smart contract exploits and Aave's declining market share following the rsETH exploit.