Safeguarding DeFi Infrastructure Builders

Welcome to our institutional newsletter. This week, we focus on the need to safeguard the people building DeFi infrastructure. As traditional finance companies increasingly engage with DeFi, it's crucial to protect the technology and infrastructure that make it valuable. The DeFi Education Fund, a nonpartisan nonprofit organization, invites you to join us in defending key policy objectives. For instance, the Promoting Innovation in Blockchain Development Act aims to protect software developers from misclassification under criminal code. Meanwhile, Ethereum's Layer 2 strategy is under scrutiny, with some arguing that the rollup model is flawed due to its focus on throughput rather than trust at the intermediary layer. State channels offer an alternative, enabling peer-to-peer transactions off-chain and reducing the need for intermediaries. The market is shifting, with the CFTC preparing to approve a framework for perpetual futures, which will require infrastructure that can settle cross-chain in real-time without custodial chokepoints. Rollups, by design, may not be suitable for this task, and the market is starting to price in the limitations of this approach.