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Centralized Infrastructure Causes Issues for Decentralized Crypto During AWS Outage

Centralized Infrastructure Causes Issues for Decentralized Crypto During AWS Outage

Bitget-RWA2025/10/26 12:28
By:Bitget-RWA

- 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

Web Services (AWS) disruption, which persisted for 15 hours, has exposed how much the crypto sector depends on centralized service providers, even though foundational blockchains like and remained fully functional throughout the incident, . Major platforms including , , and MetaMask experienced significant outages, leaving users unable to access accounts, make transactions, or view balances, despite the underlying blockchains operating normally. This event highlights the ongoing conflict between the decentralized ideals of Web3 and the centralized infrastructure supporting its applications.

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,

. The consequences were especially severe for crypto services. Coinbase experienced login problems and suspended transactions on its mobile platform, while MetaMask users saw incorrect zero balances—though their assets on the blockchain remained safe, according to Coinotag. Anthurine Xiang, co-founder of EthStorage and , compared the scenario to "the house is fine, but the door is jammed," stressing that frontend dependencies prevented users from accessing otherwise operational blockchains, as noted by Coinotag.

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

and Akash to reduce the risk of single points of failure, as mentioned in the Coinotag article.

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,

. At the same time, crypto projects are being urged to diversify their infrastructure to boost reliability. Outages like this one have revealed the weaknesses of centralized setups, and achieving genuine decentralization may require balancing scalability, regulatory needs, and distributed systems—a process that experts say could take years .

0

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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