Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on protecting the people behind DeFi infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the importance of safeguarding software developers who create the foundation of DeFi.
She notes that traditional finance companies are increasingly embracing DeFi-related initiatives, and it's crucial to protect the open-source, permissionless, and programmable technology that drives 21st-century finance. The DeFi Education Fund has been engaging in bipartisan discussions with Congressional leaders to build legislation that reflects a neutral understanding of decentralized technology.
One key objective is to protect 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 controlling customer assets and transmitting funds on behalf of customers. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, discusses Ethereum's scaling problem, 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.
He advocates for state channels, which allow peer-to-peer transactions off-chain, eliminating the need for intermediaries. The newsletter also covers headlines of the week, including the impact of smart contract exploits on the market, and a chart showing Aave's market share slide after the rsETH exploit.