Defending DeFi Infrastructure and the People Behind It

Welcome to the Crypto Long & Short institutional newsletter. This week, we delve into the need to safeguard the individuals building DeFi infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the significance of protecting open-source, permissionless, programmable, non-custodial, globally accessible, and interoperable technology. The DeFi Education Fund, a non-partisan, non-profit organization, invites readers to join in defending key policy objectives. Recent discussions with Congressional leaders have highlighted the importance of software developer protections, as most industry participants agree that protecting DeFi developers is crucial. The Promoting Innovation in Blockchain Development Act, introduced by Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren, aims to protect software developers from misclassification under criminal code. The bill clarifies that Section 1960 applies only to those controlling customer assets and transmitting funds on behalf of customers. In a separate article, Alexis Sirkia, chairman and co-founder of Yellow Network, argues that Ethereum's scaling problem was never about throughput, but rather about how value moves between participants. The rollup model, designed to address congestion, has produced isolated liquidity pools that can't interact without routing assets through bridge infrastructure. State channels, on the other hand, allow participants to transact peer-to-peer off-chain, eliminating the need for intermediaries. The CFTC's preparation to approve the first U.S. framework for perpetual futures will pull a significant share of offshore derivatives volume into regulated venues, highlighting the need for infrastructure that can settle cross-chain in real-time without custodial chokepoints. The market is starting to recognize that rollups failed to deliver a unified scale due to their design flaws, and capital and builders will migrate to infrastructure that eliminates intermediaries entirely.