Centralized Infrastructure Causes Issues for Decentralized Crypto During AWS Outage
- AWS outage exposed crypto platforms' reliance on centralized infrastructure despite resilient blockchains. - 70% of Ethereum nodes hosted on major clouds like AWS, creating systemic risks per Coinotag. - Experts advocate hybrid models (e.g., Filecoin) and multi-homing to mitigate single-failure points. - Regulatory compliance and speed challenges hinder adoption of decentralized alternatives. - Industry faces balancing scalability, compliance, and distributed architecture for true decentralization.
The recent
The root of the outage was traced to a DNS management issue within AWS's DynamoDB service, which affected more than 2,000 applications worldwide, including financial technology platforms like Venmo and Zoom,
Specialists point out that this event reveals a fundamental vulnerability: nearly 70% of Ethereum nodes are hosted by major cloud services such as AWS, Google Cloud, and Azure, Coinotag reported. Jamie Elkaleh, Bitget Wallet’s chief marketing officer, observed that while blockchain networks have achieved decentralization at the ledger level, the supporting infrastructure is still largely centralized, introducing risks. He suggested adopting hybrid solutions that split workloads between conventional cloud providers and decentralized networks like
This incident has also reignited discussions about the feasibility of fully decentralized infrastructure. Some, like Jawad Ashraf of Vanar Blockchain, criticized the sector for "relying on the same servers," while others pointed out that decentralized options often fall short in speed and regulatory compliance, which hinders widespread use, according to Coinotag. Regulatory requirements are another consideration: many crypto companies choose AWS because it meets standards like SOC 2, which decentralized networks are still working to achieve, Coinotag added.
Following the outage, there has been a stronger push for "credible multi-homing," or distributing services across several providers. Solana, for example, reported that its throughput was unaffected during the incident, showing that core blockchain functions can remain stable even if supporting services fail, Coinotag noted. Still, the episode highlighted that user interfaces and APIs, which often depend on centralized systems, continue to be a vulnerability.
As the sector addresses these issues, AWS has responded by disabling problematic automation and adding new protections to avoid similar incidents,
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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