AWS outage paralyzes the cryptocurrency market: What exactly are we decentralizing?

Compiled by Tim, PANews

Coinbase transactions were interrupted, Robinhood experienced slowdowns, and an Infura outage prevented MetaMask from connecting. Within minutes, Layer 2 networks like Polygon, Optimism, Arbitrum, Base, Linea, and Scroll all went down.

ManFromHell bluntly stated: "When AWS crashed, half of the cryptocurrency world came to a standstill. Today's decentralized atmosphere is really outrageous."

Ethereum continues to produce blocks and Bitcoin runs smoothly.

The blockchain itself remained intact, but exchanges interrupted services, wallets were disconnected, and users were blocked from "decentralized" finance due to a minor glitch in the domain name resolution of a single cloud service provider.

An industry designed to eliminate trusted third parties is proving its existence is still reliant on Jeff Bezos’ infrastructure.

When Amazon's server sneezes, the so-called anti-censorship revolution comes to an end. Who is actually in control?

Infura, a ConsenSys-backed infrastructure service that connects MetaMask to blockchain networks, reported outages for Polygon, Optimism, Arbitrum, Linea, Base, and Scroll networks during the AWS outage.

At 3:11 a.m. Eastern Time, when a DNS resolution failure occurred on the DynamoDB endpoint in Amazon's US-EAST-1 region, Infura's status page instantly turned red.

Ethereum Mainnet JSON-RPC API: Outage.

Polygon Network: Outage.

Optimism, Arbitrum, Linea, Base, Scroll chains: all interrupted.

Six so-called "decentralized" second-layer networks were collectively disconnected because they all relied on the same centralized channel to connect users.

During the Amazon cloud service outage, MetaMask users were unable to access Ethereum and the second-layer network, causing transactions to stagnate and the Dapp interface to become unresponsive.

The problem is not with the chain, because the validating nodes continue to run and blocks are continuously generated, but because the path to access the blockchain must go through a single company's servers, which are built on Amazon's cloud infrastructure.

Coinbase and its Base app highlight the centralized irony within the crypto industry’s supposedly decentralized ethos.

During the AWS service outage, both Coinbase and Base platforms were temporarily unavailable, preventing users from logging in, buying, selling, or withdrawing cryptocurrencies.

Coinbase has acknowledged the issue and said it is actively "restructuring" to prevent similar outages in the future, an admission that its infrastructure is not as decentralized as its marketing claims.

Meanwhile, approximately 2,368 Ethereum execution nodes are hosted on AWS infrastructure, representing approximately 37% of the total number of Ethereum network nodes.

While this isn’t enough to stop the blockchain from operating, it’s enough to make it difficult for most users who don’t operate their own nodes to access.

If decentralized systems require centralized infrastructure to function, then what exactly are we decentralizing?

A familiar plot

On April 15, 2025, Amazon Web Services experienced a "connectivity issue." Binance suspended withdrawals, and KuCoin trading was interrupted. MEXC, Gate.io, Coinstore, DeBank, and Rabby Wallet—at least eight platforms—reported service outages within minutes.

Six months later: The script is almost identical.

Amazon Cloud accounts for about 30% of the global cloud market, Microsoft Cloud accounts for 20%, and Google Cloud Platform accounts for 13%.

Amazon, Microsoft, and Google control 63% of the infrastructure that supports the operation of the Internet, including most of the infrastructure of the "decentralized" ecosystem of cryptocurrencies.

Binance runs on AWS, as does Coinbase. BitMEX, Huobi, Crypto.com, Kraken—all these exchanges rely on Amazon's infrastructure to meet their users' demands for low-latency, high-throughput transaction processing. If Amazon's services were to fail, the leading crypto platforms would be paralyzed.

ManFromHell's tweet is not an exaggeration, but an objective statement.

But the true decentralization is immediately evident here: during the two Amazon cloud service outages, the XRP ledger continued to produce blocks normally.

Validation nodes are distributed across AWS, Google Cloud, Hetzner, DigitalOcean, and independent servers. This distributed architecture means that no single point of failure can bring down the entire network.

Node contributor Vet pointed out: "This is exactly where decentralization is difficult to achieve, especially in terms of geographical distribution and hosting."

Distributed infrastructure is indeed possible, if you are willing to invest the cost and build it, but it is difficult for most projects to achieve.

How many more failures will it take before "decentralization" stops being a marketing gimmick and becomes a hard requirement?

Cryptocurrency outage: Worldwide attention

"If Amazon Cloud goes down, the entire network goes down. But blockchain never... Wait, forget what I said. This cryptocurrency world is a joke. Everyone promotes decentralization and censorship resistance, but in reality... they all rely 100% on cloud services." - Lefteris Karapetsas, founder of Rotkiapp

"A platform that constantly touts 'decentralization' has been defeated by a centralized cloud service provider. The irony is off the charts." Matt Flint expressed the common sentiment of thousands of users about Coinbase.

"If an outage in Amazon's cloud service can affect the price of your currency, then it is neither decentralized nor a real currency. Bitcoin is the king, and altcoins are nothing." Carla, a Bitcoin maximalist, spoke out the embarrassing truth that the protocol faction has been shouting for years.

Lefteris Karapetsas once again struck a philosophical blow: "Blockchain was originally intended to be decentralized infrastructure, and we have completely failed on that path."

"It's not a struggle to survive, nor a struggle to move forward, but a complete failure."

During the last AWS outage in April, Binance CEO Gracy Chen said: “AWS data center issues affected several centralized exchanges, but there’s no need to panic. This serves as a solid reminder: perhaps it’s time to explore decentralized cloud services.”

Half a year later, this sentence still applies.

Dr. Max Li, CEO of OORT, outlines a solution that everyone knows about but few are willing to pay for: "Decentralized cloud computing offers a powerful alternative by distributing data and processing power across the entire network, effectively reducing the risk of single points of failure."

Coinbase responded to public criticism by announcing that it was "restructuring its services" to prevent future disruptions. Essentially, they finally admitted that their structure contradicted their marketing message.

The service interruption did not cause market turmoil for the time being, but it did make people feel uneasy.

Suddenly, the conversation turned to the alternatives and what a decentralized model could look like if someone actually built one.

Smart money is never content to complain about centralization but to bet on alternatives.

When the slogan finally becomes reality, does anyone still remember the original intention of decentralization?

Why do some people take shortcuts?

Operating your own nodes means purchasing expensive hardware, ensuring stable power supply, maintaining bandwidth quality, and hiring professionals who are truly proficient in the business, all of which mean high operation and maintenance costs.

Amazon Web Services offers comparable service at a fraction of the cost, with a commitment to 99.99% uptime and the reliability of the infrastructure Amazon has invested decades in building.

For startups racing against time to seize market opportunities, this is a choice that requires no hesitation.

Adopting a multi-cloud strategy is expensive, and the technical barriers to entry required to build your own infrastructure are insurmountable obstacles for most teams.

Due to the delay problem caused by geographical redundancy, traders are particularly sensitive to such instantaneous differences, which can affect the entire system.

All the philosophical arguments for decentralization ultimately collide with the harsh economic realities of cloud computing: centralized infrastructure is cheaper, faster, and "good enough" until one day it no longer meets the needs.

Most projects choose speed over autonomy, and that's understandable. Imagine how you'd explain to a venture capitalist why you're doubling down on infrastructure to stay true to your principles.

But there is another angle that many people avoid talking about: the CLOUD Act, a law that allows the US government to access overseas data.

Under U.S. law, authorities have the power to request data from U.S. cloud providers, regardless of where the data is actually stored.

Whether the data is stored on servers in Europe or in data centers in Asia, as long as it is hosted by Amazon Web Services, Microsoft Azure or Google, U.S. law enforcement agencies can access it after obtaining appropriate legal authorization without the approval of any foreign court.

This reality complicates cryptocurrencies’ claims of censorship resistance, especially when much of their infrastructure relies on servers that are subject to U.S. government data requests.

European regulators increasingly view U.S. dominance in cloud computing as a sovereignty issue, and some authorities have warned against using U.S.-based cloud services for sensitive data.

Decentralization promises freedom from institutional control.

However, most of the encryption infrastructure ultimately fell into the control of three companies that are subject to the US government.

If your “trustless” system requires Amazon not to comply with law enforcement requests, how “trustless” is it?

The hidden cost of shortcuts

Multi-cloud isn't rocket science; spread your infrastructure across AWS, Azure, and Google Cloud, and establish cross-region redundancy outside of the US East region.

Accept higher cost and complexity as the necessary price to pay for true resilience.

The XRP Ledger has proven reliability. Its distributed network of validating nodes across multiple cloud providers ensures the network continues to operate even when other systems fail.

This is not because XRPL technology is superior, but because they chose a different architectural path and paid the corresponding cost for redundancy.

Decentralized alternatives do exist, but they remain on the fringes.

Filecoin, IPFS, and Arweave provide decentralized storage solutions.

Akash Network provides decentralized cloud computing services.

The ICP protocol is committed to achieving full-stack decentralization.

These technologies are still in their early stages, and adoption is slow. Developers tend to choose what they are familiar with, and that familiarity is AWS.

Vanar launched Neutron specifically to address these dependencies, two weeks after the AWS outage in April.

“This opens up new possibilities, from enabling pure on-chain file storage without relying on third parties to enabling verification of the true information within files,” said Jawad Ashraf, CEO of Vanar.

At the same time, every project faces the same choice: rent the infrastructure of large technology companies and bear the systemic risks, or build a truly decentralized infrastructure and bear the corresponding costs.

There is no middle ground. You either rely on a centralized provider or you build your own.

Most projects choose to rely on it simply because it is cheaper now, but they turn a blind eye to the price they will pay tomorrow when Amazon DNS failures occur frequently.

How many billions would need to be temporarily frozen to make “temporarily” unacceptable?

On October 20th, Ethereum continued to produce new blocks, and the Bitcoin network remained unaffected. All blockchain systems operated normally, with all protocols functioning precisely as designed.

This broken access layer reveals cryptocurrency’s worst secret: you can verify transactions all you want, but if even the ability to submit them is controlled by Amazon’s cloud, your autonomy is a performative illusion.

Two major outages within six months, with the same root cause but in different locations.

The root of this flaw lies in economic costs: centralized infrastructure still has the advantages of lower costs and easier operation, which means that even if projects are fully aware of the risks, they will still be accompanied by them.

Cryptocurrency claims to adhere to the principle of "don't trust, verify", but at the same time it is highly dependent on the normal operation of three companies. This dependence itself is a kind of trust.

It was originally built to escape institutional control, but it handed over its lifeline to the world's biggest gatekeeper.

When the infrastructure layer is controlled by centralized entities, decentralization at the protocol level becomes meaningless.

The next Amazon cloud outage is sure to come, and then there will be another, each one triggering outrage on Twitter and the same old promises of improvements, only to be followed by a repeat of the past, a relapse into the throes of convenience.

Cryptocurrencies must change, adopt multi-cloud architectures, deploy geographically redundant systems, and develop truly decentralized alternatives. Otherwise, they will have to admit that their touted "decentralization" is just old wine in new bottles and will never be able to break away from the essence of traditional centralized systems.

When the next Amazon DNS outage prevents you from accessing your "self-hosted" wallet, will you still believe in the so-called trustless system?