Safeguarding DeFi's Infrastructure Builders

Welcome to Crypto Long & Short, our institutional newsletter. This week, we focus on the need to safeguard the people behind DeFi infrastructure. Jennifer Rosenthal, chief communications officer at the DeFi Education Fund, emphasizes the importance of protecting open-source, permissionless, and programmable technology. She notes that traditional finance companies are increasingly embracing DeFi-related initiatives, recognizing the potential of this technology to upgrade the financial system. Rosenthal highlights the need for policy objectives that defend the technology and infrastructure that make DeFi valuable, including software developer protections. For instance, the Promoting Innovation in Blockchain Development Act aims to protect software developers from misclassification under criminal code. Meanwhile, Alexis Sirkia, chairman and co-founder of Yellow Network, discusses Ethereum's scaling problem, arguing that the rollup model was flawed from the start. He believes that state channels offer a better solution, enabling peer-to-peer transactions off-chain and reducing the need for intermediaries. Sirkia also touches on the CFTC's plans to approve a framework for perpetual futures, which could shift a significant share of offshore derivatives volume into regulated venues. Other topics include the recent headlines on smart contract exploits and the market share of Aave after the rsETH exploit.