Safeguarding DeFi's Builders: The Key to a Robust Decentralized Finance Infrastructure

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the crucial aspect of safeguarding the people driving DeFi innovation. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the need to protect the technology and infrastructure that make DeFi valuable. She notes that traditional finance companies are increasingly embracing DeFi-related initiatives, and it's essential to defend high-level policy objectives that support neutral, decentralized technology. Rosenthal also discusses the Promoting Innovation in Blockchain Development Act of 2026, a bipartisan bill aimed at protecting software developers from misclassification under criminal code. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, comments on Ethereum's L2 strategy, arguing that the rollup model was flawed from the start, as it addressed congestion by creating parallel execution environments that can't interact without routing assets through bridge infrastructure. Sirkia advocates for state channels, which allow participants to transact peer-to-peer off-chain, eliminating the need for intermediaries. He believes that the industry's response to bridge exploits has been misguided, and that state channels offer a more secure and scalable solution. The newsletter also features headlines of the week, including the impact of smart contract exploits on the market, and a chart highlighting Aave's market share slide after the rsETH exploit.