Shielding the Architects of DeFi Infrastructure

Welcome to Crypto Long & Short, our institutional newsletter. This week, we delve into the world of DeFi infrastructure and the need to protect its builders. Alexandra Levis kicks off our expert insights, followed by Jennifer Rosenthal, who emphasizes the importance of defending the people behind DeFi. As chief communications officer at the DeFi Education Fund, Rosenthal highlights the growing trend of traditional finance companies embracing DeFi-related initiatives and the need for open-source, permissionless, programmable, non-custodial, globally accessible, and interoperable technology to serve as the infrastructure for 21st-century finance. The DeFi Education Fund invites individuals and companies to join them in protecting the technology and infrastructure that makes DeFi valuable, focusing on high-level policy objectives such as software developer protections. Recent discussions with Congressional leaders have led to the introduction of the Promoting Innovation in Blockchain Development Act of 2026, which aims to protect software developers from misclassification under criminal code Section 1960. In a separate article, Alexis Sirkia, chairman and co-founder of Yellow Network, argues that Ethereum's scaling problem was never about throughput but rather about how value moves between participants. Sirkia contends that the rollup model was flawed from the start, as it created parallel execution environments that produced isolated liquidity pools, leading to fragmentation rather than scaling. He proposes state channels as a solution, allowing participants to transact peer-to-peer off-chain with the base layer serving as the enforcement mechanism. The industry is shifting, with the CFTC preparing to approve the first U.S. framework for perpetual futures, which will require infrastructure that can settle cross-chain in real-time without custodial chokepoints. This week's headlines and chart of the week provide further insights into the market, including the impact of smart contract exploits and Aave's market share slide after the rsETH exploit.