Safeguarding the Architects of DeFi Infrastructure

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the people driving DeFi innovation. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the importance of protecting the technology and infrastructure that underpin DeFi. As traditional finance companies increasingly engage with DeFi, it's crucial to defend key policy objectives that support this growth. Rosenthal discusses the Promoting Innovation in Blockchain Development Act, which aims to protect software developers from misclassification under criminal code. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, argues that Ethereum's scaling issues stem from a fundamental design flaw in the rollup model, which prioritizes throughput over the movement of value between participants. He advocates for state channels as a more effective solution, enabling peer-to-peer transactions off-chain with the base layer serving as the enforcement mechanism. The newsletter also covers recent headlines, including the impact of smart contract exploits on the market and Aave's declining TVL market share following the rsETH exploit.