Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the individuals building DeFi infrastructure.
As traditional finance companies increasingly embrace DeFi-related initiatives, it's crucial to protect the technology and infrastructure that makes DeFi valuable. The DeFi Education Fund, a nonpartisan nonprofit organization, invites you to join in defending key policy objectives. One crucial aspect is protecting software developers from misclassification under criminal code, as seen in the proposed Promoting Innovation in Blockchain Development Act.
This act aims to clarify that certain regulations apply only to those controlling customer assets, not software developers. Furthermore, the article discusses Ethereum's scaling issue, which was never solely about throughput but rather about how value moves between participants.
The rollup model, designed to address congestion, has led to fragmentation rather than scaling. An alternative approach, state channels, allows for peer-to-peer transactions off-chain, potentially eliminating the need for intermediaries. The shift towards regulated venues for perpetual futures and the need for infrastructure that can settle cross-chain in real-time without custodial chokepoints are also highlighted.
The week's headlines and a chart showing Aave's market share decline following a smart contract exploit are also included.