Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the people building decentralized finance 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, and it's essential to defend policy principles that make DeFi possible.
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 their behalf. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, comments on 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 suggests that state channels, which allow peer-to-peer transactions off-chain, could be a more effective solution.
The newsletter also covers recent headlines, including the impact of smart contract exploits on the market and the decline of Aave's TVL market share after the rsETH exploit.