Safeguarding DeFi Infrastructure Builders

Welcome to our institutional newsletter. This week, we discuss the need to safeguard the people behind DeFi infrastructure. As traditional finance companies increasingly adopt DeFi technology, it's essential to protect the developers and builders who make this innovation possible. The DeFi Education Fund, a nonpartisan nonprofit, is working to defend policy objectives that support the growth of DeFi. Recently, the Promoting Innovation in Blockchain Development Act was introduced to protect software developers from misclassification under criminal code. The bill clarifies that certain regulations only apply to those who control customer assets, not developers who write code. Meanwhile, Ethereum's L2 strategy is facing challenges due to a fundamental design flaw. The rollup model was designed to increase throughput, but it has led to fragmentation and isolated liquidity pools. A new approach, state channels, allows for peer-to-peer transactions without intermediaries, potentially solving the scalability issue. As the crypto market continues to evolve, it's crucial to support legislative and regulatory initiatives that foster clarity and enable responsible participation in both centralized and decentralized markets.