Safeguarding DeFi Infrastructure Builders

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the critical issue of safeguarding the people behind DeFi infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, highlights the need to protect the technology and infrastructure that make DeFi valuable. She notes that traditional finance companies are increasingly embracing DeFi-related initiatives, and it's essential to defend policy principles that make building and using DeFi possible. Rosenthal also discusses the Promoting Innovation in Blockchain Development Act, which aims to protect software developers from misclassification under criminal code. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, comments on Ethereum's L2 strategy, arguing that it's failing due to a fundamental design flaw. He believes that the rollup model was never going to deliver a unified scale because it was designed around the wrong assumption - that Ethereum's limitation was throughput, when the actual constraint was always how value moves between participants. Sirkia suggests that state channels, which allow participants to transact peer-to-peer off-chain, could be a better solution. The newsletter also features headlines of the week, including the impact of smart contract exploits on the market, and a chart of the week showing Aave's market share slide after the rsETH exploit.