AWS Outage Reveals Crypto’s Weak Spot: Centralized Dependence

The latest Amazon Internet Companies (AWS) outage that knocked out main crypto and fintech platforms, together with Coinbase, Robinhood, MetaMask and Venmo, has reignited debate over how decentralized Web3 actually is.

Whereas blockchains continued producing blocks uninterrupted, thousands and thousands of customers have been unable to entry wallets, exchanges and decentralized purposes (DApps) as a result of their interfaces and software programming interfaces (APIs) have been hosted on centralized servers.

“Decentralization has succeeded on the ledger layer however not but on the infrastructure layer,” Jamie Elkaleh, chief advertising and marketing officer at Bitget Pockets, informed Cointelegraph. “Actual resilience relies on diversifying past hyperscalers into community-driven and distributed networks.”

Elkaleh added that full decentralization “isn’t but possible at scale” as a result of most groups depend on hyperscalers like AWS, Google Cloud and Azure for compliance, pace and uptime. The sensible aim, he mentioned, needs to be “credible multi-home” infrastructure, distributing workloads throughout each cloud and decentralized networks to keep away from single factors of failure.

Elkaleh argued that cloud suppliers supply scalability and safety, however at the price of focus threat. “If one area or supplier goes down, lots of of apps are affected,” he mentioned. Hybrid methods, mixing cloud with decentralized storage and community-run nodes, are the following logical step.

Associated: Amazon AWS Outage Hits Coinbase Cell App, Robinhood

Customers have been locked out of working blockchains

Anthurine Xiang, co-founder of EthStorage and QuarkChain, mentioned the outage proved that “even in Web3, many providers nonetheless rely closely on centralized infrastructure.”

She defined that true decentralization requires redesigning each layer, from storage to entry, in order that no single supplier can take methods offline. “It’s like the home is ok, however the door is jammed,” Xiang mentioned, describing how customers have been locked out of working blockchains.

The outage started on Monday and lasted for roughly 15 hours. The outage brought about Coinbase’s app and Base community to crash, stopping customers from logging in or making transactions, whereas Robinhood merchants reported delays and API failures.

The outage additionally affected MetaMask, with customers reporting that they noticed zero balances of their wallets. “Their belongings have been protected, however the service liable for retrieving steadiness knowledge had gone offline,” Xiang defined, noting it wasn’t a technical failure of the blockchain itself.

In the meantime, Jawad Ashraf, CEO of Vanar Blockchain, criticized the crypto business for all “operating on the identical servers.” He claimed that roughly 70% of Ethereum nodes are hosted by AWS, Google, or Microsoft. “We’re simply paying three completely different landlords as a substitute of 1,” he mentioned.

Constructing totally decentralized methods is feasible, he added, however “most groups gained’t do it anytime quickly” as a result of it’s slower and extra advanced than spinning up on AWS.

A wake-up name

Elkaleh mentioned the outage ought to speed up funding in decentralized cloud, storage and compute networks akin to Akash, Filecoin, Arweave and others. He known as for Web3 builders to embrace hybrid fashions that blend conventional reliability with distributed redundancy.