The recent Amazon Web Services (AWS) outage, which disrupted major crypto and fintech platforms like Coinbase, Robinhood, MetaMask, and Venmo, has intensified discussions about the true level of decentralization in Web3.
While blockchain ledgers continued to operate and produce blocks without interruption, millions of users were unable to access their wallets, exchanges, and decentralized applications (DApps). This inaccessibility was due to their interfaces and application programming interfaces (APIs) being hosted on centralized servers.
Jamie Elkaleh, chief marketing officer at Bitget Wallet, stated, "Decentralization has succeeded at the ledger layer but not yet at the infrastructure layer. Real resilience depends on diversifying beyond hyperscalers into community-driven and distributed networks."
Elkaleh further explained that complete decentralization "isn’t yet feasible at scale" because most development teams rely on hyperscalers such as AWS, Google Cloud, and Azure for critical aspects like compliance, speed, and uptime. He proposed that the practical objective should be "credible multi-home" infrastructure, which involves distributing workloads across both cloud and decentralized networks to mitigate single points of failure.
According to Elkaleh, cloud providers offer significant scalability and security advantages, but these come at the expense of concentration risk. "If one region or provider goes down, hundreds of apps are affected," he observed. He believes that hybrid systems, which combine cloud services with decentralized storage and community-run nodes, represent the next logical evolutionary step.
Users Locked Out of Functioning Blockchains
Anthurine Xiang, co-founder of EthStorage and QuarkChain, commented that the outage demonstrated how "even in Web3, many services still depend heavily on centralized infrastructure."
She elaborated that achieving true decentralization necessitates a redesign of every layer, from data storage to user access, ensuring that no single provider can unilaterally disable systems. Xiang described the situation metaphorically: "It’s like the house is fine, but the door is jammed," highlighting how users were unable to access blockchains that were otherwise functioning correctly.
The outage, which commenced on Monday and persisted for approximately 15 hours, caused the Coinbase app and its Base network to crash. This prevented users from logging in or executing transactions. Similarly, Robinhood traders reported experiencing delays and API failures.
MetaMask was also impacted, with users reporting that their wallet balances appeared as zero. Xiang clarified that this was not a failure of the blockchain technology itself, but rather an issue with the service responsible for retrieving balance data, which had gone offline.
Jawad Ashraf, CEO of Vanar Blockchain, criticized the crypto industry for its widespread reliance on a limited number of server providers. He claimed that approximately 70% of Ethereum nodes are hosted by major cloud providers like AWS, Google, or Microsoft. "We’re just paying three different landlords instead of one," he remarked.
Ashraf acknowledged that building fully decentralized systems is technically achievable, but he anticipates that "most teams won’t do it anytime soon" due to the increased complexity and slower development pace compared to utilizing services like AWS.
A Necessary Wake-Up Call
Elkaleh suggested that this outage should serve as a catalyst for increased investment in decentralized cloud, storage, and compute networks, such as Akash, Filecoin, Arweave, and others. He urged Web3 developers to adopt hybrid models that combine the reliability of traditional infrastructure with the redundancy offered by distributed networks.
"Every major outage is a wake-up call," Elkaleh asserted. "The future of Web3 won’t be defined by how decentralized the tokens are, but by how distributed the infrastructure truly becomes."