The recent Amazon Web Services (AWS) outage caused major cryptocurrency and fintech platforms, including Coinbase, Robinhood, MetaMask, and Venmo, to go down, reigniting the debate about how decentralized Web3 really is.
While the blockchain continued to produce blocks without interruption, millions of users were unable to access wallets, exchanges, and decentralized applications (DApps) because their interfaces and application programming interfaces (APIs) were hosted on centralized servers.
"Decentralization has succeeded at the ledger level, but not at the infrastructure level," Bitget Wallet Chief Marketing Officer Jamie Elkaleh told Cointelegraph. "True resilience depends on diversification, moving beyond the hyperscale cloud providers to community-driven and distributed networks."
Elkaleh added that complete decentralization "is not feasible at scale" because most teams rely on hyperscale cloud providers like AWS, Google Cloud, and Azure for compliance, speed, and uptime. He stated that the real goal should be "trustworthy multi-tenancy" infrastructure that distributes workloads across cloud and decentralized networks to avoid single points of failure.
Elkaleh believes that cloud service providers offer scalability and security, but at the cost of concentrated risk. "If one region or provider goes down, hundreds of applications are affected," he said. A hybrid system that combines cloud with decentralized storage and community-operated nodes is the next logical step.
Anthurine Xiang, co-founder of EthStorage and QuarkChain, stated that this outage demonstrated that "even in Web3, many services still heavily rely on centralized infrastructure."
She explained that true decentralization requires redesigning every layer, from storage to access, so that no single provider can take the system offline. "It's like the house is fine, but the door is stuck," Xiang said, describing how users can be locked out of a normally functioning blockchain.
The outage began on Monday and lasted for about 15 hours. It caused the Coinbase app and Base network to crash, preventing users from logging in or trading, while Robinhood traders reported delays and API failures.
The outage also affected MetaMask, with users reporting zero balances in their wallets. "Their assets are safe, but the service responsible for retrieving balance data is offline," Xiang explained, noting that this is not a technical failure of the blockchain itself.
Meanwhile, Jawad Ashraf, CEO of Vanar Blockchain, criticized the cryptocurrency industry for "running on the same server." He claimed that about 70% of Ethereum nodes are hosted by AWS, Google, or Microsoft. "We are just paying rent to three different landlords instead of one," he said.
He added that building a fully decentralized system is possible, but "most teams won't do it anytime soon" because it is slower and more complex than launching on AWS.
Elkaleh stated that this outage should accelerate investment in decentralized cloud, storage, and computing networks like Akash, Filecoin, and Arweave. He urged Web3 builders to embrace hybrid models that combine traditional reliability with distributed redundancy.
"Every major outage is a wake-up call," he said. "The future of Web3 will not be defined by the degree of decentralization of tokens, but by the infrastructure truly becoming more distributed."
Related: U.S. Energy Secretary Proposes Accelerating Grid Access for AI and Bitcoin (BTC) Mining Operations
Original article: “The house is fine, but the door is stuck”: AWS outage exposes cryptocurrency weaknesses
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