Safeguarding DeFi Infrastructure Builders

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the people behind DeFi infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the importance of protecting these individuals. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, comments on the shortcomings of Ethereum's L2 strategy, highlighting its fundamental design flaw. We also invite you to join us in defending key policy principles that make DeFi possible. Additionally, we discuss the Promoting Innovation in Blockchain Development Act, which aims to protect software developers from misclassification under criminal code. The act clarifies that Section 1960 applies only to those controlling customer assets and transmitting funds on behalf of customers. Furthermore, we explore how blockchain technology is evolving faster than existing regulations and how engineers developing open, disintermediated systems do not fit into traditional financial regulations. We support legislative and regulatory initiatives that foster clarity and enable responsible participation in both centralized and decentralized markets. In another article, Alexis Sirkia argues that Ethereum's scaling problem was never about throughput, but rather about how value moves between participants. The rollup model was designed around the wrong assumption, leading to fragmentation rather than scaling. State channels, on the other hand, allow participants to transact peer-to-peer off-chain, eliminating the need for intermediaries. Finally, we highlight key headlines from the week, including the impact of smart contract exploits on the market and the shift of crypto derivatives volume into regulated venues.