Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the people building decentralized finance infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, highlights the importance of protecting open-source, permissionless, and programmable technology that serves as the foundation for 21st-century finance.
Rosenthal notes that traditional finance companies are increasingly embracing DeFi-related initiatives, and it is crucial to defend high-level policy objectives that support this technology. One key area of focus is software developer protections, which have been a topic of discussion in recent market structure and crypto policy talks. A bipartisan bill, the Promoting Innovation in Blockchain Development Act of 2026, aims to protect software developers from misclassification under criminal code Section 1960.
The bill clarifies that Section 1960 applies only to those who control customer assets and transmit funds on behalf of customers. In a separate article, Alexis Sirkia, chairman and co-founder of Yellow Network, discusses Ethereum's scaling problem, arguing that the rollup model was never going to deliver a unified scale due to its design flaws.
Sirkia contends that the actual constraint was not throughput but how value moves between participants. He advocates for state channels, which allow participants to transact peer-to-peer off-chain, with the base layer serving as the enforcement mechanism.
This approach eliminates the need for intermediaries and reduces the risk of fragmentation. The newsletter also includes headlines of the week, a chart highlighting Aave's market share slide after the rsETH exploit, and a call to engage with the DeFi community.