Safeguarding the Architects of DeFi Infrastructure

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the individuals constructing DeFi infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, highlights the growing recognition of traditional finance companies embracing DeFi-related initiatives and the importance of protecting open-source, permissionless, programmable, noncustodial, globally accessible, and interoperable technology. The DeFi Education Fund, a nonpartisan nonprofit organization, invites readers to join in protecting the technology and infrastructure that make DeFi valuable, emphasizing high-level policy objectives worth defending. Recent discussions with Congressional leaders have been productive, with a focus on software developer protections. The bipartisan Promoting Innovation in Blockchain Development Act of 2026 aims to protect software developers from misclassification under criminal code. Meanwhile, Alexis Sirkia discusses Ethereum's scaling problem, arguing that the rollup model was flawed from the start, as it addressed congestion by creating parallel execution environments that led to isolated liquidity pools. State channels offer a solution by allowing peer-to-peer transactions off-chain, with the base layer serving as the enforcement mechanism. The industry is shifting towards infrastructure that can settle cross-chain in real-time without custodial chokepoints, making rollups less viable. This week's headlines also highlight the growth of traditional finance and crypto sector bridges, as well as the impact of smart contract exploits on the market.