Protecting DeFi Builders: The Key to Unlocking Decentralized Finance

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to protect the people building DeFi infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the importance of preserving the technology and infrastructure that makes DeFi valuable. She notes that a growing number of traditional finance companies are embracing DeFi-related initiatives, and it is crucial to defend high-level policy objectives that support the development of decentralized finance. Rosenthal highlights the introduction of the bipartisan Promoting Innovation in Blockchain Development Act of 2026, which aims to protect software developers from misclassification under criminal code. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, discusses Ethereum's scaling problem, arguing that the rollup model was designed around the wrong assumption that the limitation was throughput, when the actual constraint was how value moves between participants. Sirkia suggests that state channels, which allow participants to transact peer-to-peer off-chain, may be a more effective solution. The newsletter also features headlines of the week, including the impact of smart contract exploits on the market, and a chart of the week showing Aave's market share slide after the rsETH exploit.