AWS Outage Exposes Weaknesses in Crypto Infrastructure

AWS Outage Exposes Weaknesses in Crypto Infrastructure

The recent outage of Amazon Web Services (AWS) affected a number of major crypto and fintech platforms, such as Coinbase, Robinhood, MetaMask, and Venmo. This incident has sparked renewed discussions about the true decentralization of Web3.

Although blockchains continued to operate without interruption, millions of users found themselves unable to access wallets, exchanges, and decentralized applications (DApps). This was due to their interfaces and application programming interfaces (APIs) being hosted on centralized servers.

Jamie Elkaleh, chief marketing officer at Bitget Wallet, shared with Cointelegraph that “Decentralization has succeeded at the ledger layer but not yet at the infrastructure layer.” He emphasized that true resilience in the crypto sector requires moving beyond reliance on hyperscale providers and incorporating community-driven and distributed networks. Elkaleh pointed out that achieving complete decentralization “isn’t feasible at scale” right now, as many teams depend on major platforms like AWS, Google Cloud, and Azure for aspects like compliance and uptime. Instead, he suggested a focus on a “credible multi-home” infrastructure that spreads workloads across cloud systems and decentralized networks to prevent single points of failure.

Elkaleh acknowledged the advantages of cloud providers in terms of scalability and security; however, relying on them introduces concentration risk. “If one region or provider goes down, hundreds of apps are affected,” he noted. He argued that hybrid systems combining cloud services with decentralized storage and community-operated nodes represent the logical next step forward.

Users Criticizing Decentralized Platforms
Source: Kunal Gandhi
Related: Amazon AWS Outage Hits Coinbase Mobile App, Robinhood

Dependence on Centralized Infrastructure

Anthurine Xiang, co-founder of EthStorage and QuarkChain, stated that the outage highlighted the heavy reliance of many Web3 services on centralized infrastructure. She noted that achieving true decentralization involves redesigning all layers, from storage to access, ensuring that no single provider can take services offline. “It’s like the house is fine, but the door is jammed,” Xiang explained, illustrating how users were locked out of functioning blockchains.

The outage began on a Monday and persisted for approximately 15 hours, causing significant disruptions. Coinbase’s app and Base network experienced crashes, preventing user logins and transactions. Additionally, Robinhood users faced delays along with API failures. MetaMask users reported seeing zero balances in their wallets, though Xiang clarified that their assets were safe; the issue lay with the service that retrieves balance data, which had gone offline, rather than a blockchain malfunction.

Jawad Ashraf, CEO of Vanar Blockchain, criticized the crypto industry for all “running on the same servers,” claiming that about 70% of Ethereum nodes are hosted by AWS, Google, or Microsoft. “We’re just paying three different landlords instead of one,” he remarked. While he acknowledged that building fully decentralized systems is achievable, he indicated that “most teams won’t do it anytime soon” due to the complexities and slow speeds compared to utilizing AWS.

Solana's Performance During Outage
Source: Solana

A Call to Action for the Crypto Industry

Elkaleh expressed that this outage should stimulate investment in decentralized cloud, storage, and computing networks like Akash, Filecoin, and Arweave. He urged Web3 developers to adopt hybrid models that balance traditional reliability with distributed redundancy.

“Every major outage is a wake-up call,” he stated. “The future of Web3 won’t be defined by how decentralized the tokens are, but by how distributed the infrastructure truly becomes.”

Key Takeaways

The AWS outage affected multiple prominent crypto platforms, raising questions about Web3's decentralization.
Many crypto services still depend on centralized infrastructure, limiting true decentralization.
A hybrid approach, combining cloud services with decentralized solutions, is suggested for increasing resilience.
The incident serves as a reminder for the crypto industry to invest in decentralized networks and rethink its reliance on major cloud providers.