Ethereum Amazon Server Dependence Raises Concerns

• Ethereum’s decentralization is said to be at risk for its over-dependence on computing servers like Amazon.

• Those who stake Ethereum could be largely affected in incidents of outages as they may lose millions. 

Latest reports have disclosed that the decentralized nature of Ethereum (ETH) which is its main selling point could be under threat for its over-reliance on computing servers including Amazon. According to the report, companies like ConsenSys that provide important Ethereum infrastructure largely depend on virtual servers from cloud computing providers. Interestingly, Ethereum also has a large portion of its execution node hosted virtually on cloud servers. 

Sajida Zouarhi, a product manager at Blocknative, an Ethereum data analytics firm has a strong concern about this.

What good is it to have a diversity of people running nodes and a geographically distributed network if, in the end, it’s all running with the same cloud provider?

The issue is that when too much Ethereum infrastructure is hosted through one provider or one data center, problems including technical issues or power outages can affect a large portion of the network as well as the technology built on top of it offline. 

StrategicHash, a pseudonymous blockchain researcher, believes that ETH could do better. It has been observed that these cloud service providers could have the control to hamstring these blockchain networks that are largely dependent on them.

Speaking on this, StrategicHash referred to the data showing that 2,439 of Ethereum’s 6,810 nodes are hosted via AWS. This is around 35 percent. According to him, it is only ideal for one service provider to hold a maximum of 25 percent. Out of the 2,439 Ethereum nodes hosted via AWS, 1395 of them are found in a single data center in Ashburn, Virginia.

How Outages Can Affect Ethereum

On the part of Ethereum, the AWS outage may have a limited impact on its network as other nodes hosted elsewhere would facilitate transactions. Regardless, these outages can still cause a lot of harm according to StrategicHash.

Those who stake ETH through nodes hosted on AWS would be affected by inactivity which could cost them millions of dollars. Outages would also reduce the number of nodes on Ethereum. This would make the network centralized and vulnerable to attack. 

Pascal Caversaccio, a blockchain security researcher, commented on this.

An AWS incident can have a vast impact on user-facing applications such as hosted frontends or crypto wallets. I’m not that much afraid of any consensus failures due to cloud hosting but rather of its impact on the user. An AWS incident can have a vast impact on user-facing applications such as hosted frontends or crypto wallets.

He observed that MetaMask relies on software hosted on AWS to make transactions to Ethereum. Considering that it has over 21 million monthly users, any outage can massively affect its operation. It has also been observed that some DeFi protocols rely on AWS. It can be recalled that the AWS outage in December 2021 made the decentralized exchange dYdX halt transaction processing.

The situation of Ethereum is not perfect, but better than in 2020 when over 70 percent of its execution nodes were hosted virtually. This has decreased to 60 percent. 

StrategicHash believes that there is a solution.

A possible solution is to encourage hosting on bare metal rather than cloud providers. Bare Metal is cheaper, faster, and is unlikely to go down all at once.

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