Defending DeFi Builders: The Key to Unlocking Decentralized Finance

Welcome to Crypto Long & Short, your institutional newsletter for the latest insights on decentralized finance. This week, we focus on safeguarding the people driving DeFi innovation. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the need to protect DeFi builders, while Alexis Sirkia, chairman and co-founder of Yellow Network, critiques Ethereum's Layer 2 scaling approach. The DeFi Education Fund invites you to join them in defending the technology and infrastructure that makes DeFi valuable, with key policy objectives including software developer protections. Recent discussions with Congressional leaders have led to the introduction of the bipartisan Promoting Innovation in Blockchain Development Act of 2026, aiming to protect software developers from misclassification under criminal code. In a separate piece, Alexis Sirkia argues that Ethereum's scaling problem stems from a fundamental design flaw, where the rollup model fails to deliver unified scale due to its focus on throughput rather than value movement between participants. He advocates for state channels as a superior solution, enabling peer-to-peer transactions off-chain with the base layer serving as the enforcement mechanism. Meanwhile, the CFTC is set to approve the first U.S. framework for perpetual futures, which will significantly impact the crypto derivatives market. The infrastructure that absorbs this shift needs to settle cross-chain in real-time without custodial chokepoints, rendering rollups unsuitable for the task. As the market prices in the limitations of rollups, capital and builders are expected to migrate towards infrastructure that eliminates intermediary layers.