Safeguarding DeFi Infrastructure Builders

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the people behind DeFi infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the importance of protecting these individuals. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, analyzes Ethereum's scaling issues and the limitations of its Layer 2 strategy. He argues that the rollup model was flawed from the start, as it addressed congestion but created isolated liquidity pools that can't interact without bridge infrastructure. Rosenthal highlights the Promoting Innovation in Blockchain Development Act, a bipartisan bill aimed at protecting software developers from misclassification under criminal code. She stresses the importance of collective support for legislative and regulatory initiatives that foster clarity and reduce uncertainty in the DeFi space. Sirkia suggests that state channels, which allow participants to transact peer-to-peer off-chain, could be a more effective solution to Ethereum's scaling problems. The newsletter also features headlines of the week, including the impact of smart contract exploits on the market, and a chart showing Aave's declining market share following the rsETH exploit.