Shielding DeFi's Backbone: The Importance of Protecting Infrastructure Developers

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the crucial aspect of DeFi infrastructure protection. Alexandra Levis kicks off our expert insights with a discussion on the rising trend of traditional finance companies embracing DeFi-related initiatives. It's heartening to see these companies recognize the potential of open-source, permissionless, programmable, noncustodial, globally accessible, and interoperable technology in revolutionizing 21st-century finance. The DeFi Education Fund, a nonpartisan, nonprofit organization, invites you to join us in protecting the technology and infrastructure that make DeFi valuable. Key policy objectives we believe are worth defending include shielding software developers from misclassification under criminal code. For instance, the Promoting Innovation in Blockchain Development Act of 2026 aims to protect software developers who do not control customer assets. This act 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, analyzes Ethereum's L2 strategy, arguing that it's failing due to a fundamental design flaw. He posits that the rollup model was never designed to deliver unified scaling and instead has led to fragmentation. State channels, on the other hand, allow for peer-to-peer transactions off-chain, with the base layer serving as the enforcement mechanism. This approach eliminates the need for intermediaries and could provide a more scalable solution. Other notable headlines this week include the CFTC's preparation to approve the first U.S. framework for perpetual futures and the impact of smart contract exploits on the market.