Safeguarding DeFi Infrastructure Builders

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard DeFi infrastructure builders. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, highlights the importance of protecting the people behind DeFi. Meanwhile, Alexis Sirkia discusses the shortcomings of Ethereum's L2 strategy, citing a fundamental design flaw. Rosenthal notes that traditional finance companies are increasingly embracing DeFi, and it's essential to protect the technology and infrastructure that makes DeFi valuable. She emphasizes the need to defend high-level policy objectives, including software developer protections. The Promoting Innovation in Blockchain Development Act of 2026, introduced by Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren, aims to protect software developers from misclassification under criminal code. Sirkia argues that Ethereum's scaling problem was never about throughput, but rather about how value moves between participants. He contends that the rollup model was designed around the wrong assumption, leading to fragmentation rather than scaling. State channels, which allow participants to transact peer-to-peer off-chain, may offer a solution. The CFTC is preparing to approve the first U.S. framework for perpetual futures, which will pull a significant share of offshore derivatives volume into regulated venues. The infrastructure that absorbs this volume needs to settle cross-chain in real-time without passing through custodial chokepoints, making rollups unsuitable for the task.