Welcome to Crypto Long & Short, our institutional newsletter. This week, we explore the need to safeguard the people behind DeFi infrastructure.
Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, highlights the importance of protecting open-source, permissionless, and programmable technology. She notes that traditional finance companies are increasingly embracing DeFi-related initiatives, but it's crucial to defend the technology and infrastructure that makes it valuable.
Rosenthal emphasizes the need for policy objectives that promote the growth of DeFi, including protecting software developers from misclassification under criminal code. The Promoting Innovation in Blockchain Development Act, introduced by Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren, aims to clarify that Section 1960 applies only to those who control customer assets and transmit funds on behalf of customers. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, comments on Ethereum's L2 strategy, arguing that the rollup model was designed around the wrong assumption that the limitation was throughput, when the actual constraint was how value moves between participants. Sirkia suggests that state channels, which allow participants to transact peer-to-peer off-chain, could be a more effective solution.
The newsletter also features headlines of the week, including the impact of smart contract exploits on the market, and a chart highlighting Aave's market share slide after the rsETH exploit.