Ethereum Survives AWS Outage Unscathed But Analysts Warn Of Future Incidents

Ethereum’s reliance on centralized infrastructure is under scrutiny after some U.S. users of Amazon Web Services, the world’s largest cloud hosting provider, suffered a roughly three-hour outage on Tuesday.

While Ethereum continued to operate normally despite nearly two-thirds of Ethereum validators relying on cloud hosting services, researchers fear that a similar incident in Europe could have a far greater impact on the network, as many Lido validators could have been affected. Lido is the top liquid staking provider, having amassed more than 35% of staked Ethereum.

“I imagine there would [be] some effect if AWS went down in Europe given how much Lido is in the cloud,” tweeted Evan Van Ness, an Ethereum developer. “Don’t stake with pools who run in the cloud!”

Van Ness said the outage had “zero effect” on Ethereum as it was limited to its US-EAST-1 region. The websites and point-of-sale systems of many traditional businesses were impacted, including United Airlines, Associated Press, and Toast.

Centralized Points Of Failure

The news comes as concerns regarding the centralization risks posed by some of the infrastructure underpinning the Ethereum network and its staking ecosystem have reached a fever pitch.

Researchers are desperately calling on Ethereum stakers to either solo stake or use alternative providers after Lido’s share of staked ETH surpassed one-third in recent weeks. Vitalik Buterin, Ethereum’s co-founder and chief scientist, recently prescribed that no single staking pool should control more than 15% of staked Ether.

Infura, the centralized Ethereum node provider, has also copped flak for emerging as a possible point of failure for the network. Infura responded last September by announcing plans to develop a decentralized version of its service this year. The company said its infrastructure has frequently processed more than 50% of daily Ethereum transactions.

While Ethereum proved resilient, the outage disrupted the operations of many web3 dApps and services.

Phantom, a popular Solana wallet, assured its users their assets were safe despite being unable to load the wallet. Players of the web3 game, Illuvium, complained they could not log in amid the outage. Users of Manifold, an NFT minting platform, said they could no longer access its website.

In December 2021, an AWS outage affecting the same region disrupted the services of top centralized exchanges Binance and Coinbase, and even the decentralized exchange dYdX.