Defending DeFi Infrastructure and Understanding Ethereum's Scaling Challenges

Welcome to our institutional newsletter. This week, we discuss the importance of protecting the people building DeFi infrastructure and explore Ethereum's scaling problem. The DeFi Education Fund invites you to join in helping to protect the technology and infrastructure that makes DeFi valuable. We believe in defending high-level policy objectives, including software developer protections, which have been a topic of conversation in recent market structure and crypto policy discussions. A bipartisan bill, the Promoting Innovation in Blockchain Development Act of 2026, aims to protect software developers from misclassification under criminal code. Meanwhile, Ethereum's Layer 2 strategy is failing due to a fundamental design flaw, treating the limitation as a throughput problem rather than a trust issue at the intermediary layer. State channels offer a solution by allowing participants to transact peer-to-peer off-chain, eliminating the need for intermediaries. The industry is shifting, with the CFTC preparing to approve the first U.S. framework for perpetual futures, and infrastructure that can settle cross-chain in real-time without custodial chokepoints is necessary. Rollups have failed to deliver a unified scale, and the market is starting to price in the real constraint of trust at the intermediary layer.