Why crypto’s infrastructure hasn’t caught up with its decentralization ideals
While the cryptocurrency industry champions decentralization, the underlying infrastructure powering much of the blockchain ecosystem remains surprisingly centralized. As demand for computing power soars—driven by sectors such as AI, gaming, and financial services—startups building distributed cloud networks are stepping in to challenge the dominance of Big Tech’s cloud providers.
The Push for distributed Alternatives
Repeated service disruptions and capacity bottlenecks among centralized cloud platforms have created an opening for companies building decentralized, node-based infrastructure. Their core argument: distributing workloads across numerous smaller nodes reduces concentration risk and eliminates single points of failure.
“Over time, as decentralized infrastructure matches or exceeds the performance of centralized clouds, reliance on single providers will naturally decline,” said Carlos Lei, CEO and co-founder of DePIN-based connectivity marketplace Uplink.
Today, “decentralized infrastructure” typically refers to blockchain technology—systems that spread verification and data across distributed networks. But the irony, critics say, is that much of the industry’s access layer still runs on highly centralized cloud services.
Dependence on the big three cloud providers
In 2024, Amazon Web Services (AWS), Microsoft Azure, and Google Cloud—known collectively as the Big Three—captured 68% of global cloud infrastructure revenue, according to Synergy Research Group. These platforms have become the default hosting environments not only for enterprise software but also for many blockchain projects.
This level of concentration creates systemic risks. An outage or regional disruption at a single provider can cascade across multiple industries.
Ellidason pointed to the October AWS outage as an example:
“Snapchat, Roblox, Fortnite, Kindle — all of them went down completely,” he said. “Coinbase, which is a financial service, was affected massively.”
Big cloud providers also attract startups by lowering upfront costs through credits and support programs. Transitioning away from these platforms requires companies to absorb major setup costs and manage infrastructure previously handled by hyperscalers.
The rise of modular decentralization
Despite the convenience of centralized cloud providers, more companies are experimenting with decentralized alternatives through modular shifts. Instead of abandoning the cloud entirely, they move critical components off centralized infrastructure.
Examples include:
- Filecoin and Arweave for decentralized data storage
- Akash for decentralized compute
- Render Network for distributed GPU rendering
“With outages to AWS in October and Azure in November, we’re going to see big companies partly move services to more resilient networks,” Ellidason said. “They might still stay in AWS but move storage first and then maybe AI after.”
Blockchain’s paradox: a decentralized vision built on centralized services
Blockchains are built to eliminate single points of failure—yet many of their validator nodes run on the very centralized infrastructure they aim to disrupt.
A study presented at the Usenix Security Symposium found that one in five Ethereum validators mapped could be traced back to AWS. A 2023 Messari analysis echoed similar findings across staking providers and validator hosts.
“Many operators choose centralized cloud platforms because they deliver predictable performance, easy setup and reliable uptime,” Lei said. “These platforms have become the backbone for many Web3 networks.”
When AWS goes down, the impact is immediate. During the Oct. 20 outage, Coinbase users faced login issues, failed trades, and withdrawal problems. Robinhood experienced API delays and order execution issues.
Hybrid models: a practical path forward
Recognizing both the strengths and limitations of centralized clouds, a new generation of infrastructure projects is embracing hybrid models—balancing performance, resiliency, and decentralization.
Projects like Gaimin source GPU power from gaming PCs and supplement it with small regional data centers to avoid geographic bottlenecks. Uplink uses a marketplace model to let individuals and local operators sell excess bandwidth, reducing dependence on major telecom carriers.
Researchers envision a future where workloads flow seamlessly across a mix of:
- Hyperscalers
- Regional edge networks
- Bare-metal servers
- Decentralized node operators
“Cloud doesn’t go away; its elasticity is critical,” said Yair Cleper, co-founder of Magma Devs and contributor to Lava Network. “Teams can start simple and add diversity as the business demands, without needing a rebuild.”
A shift driven by demand, not idealism
As computing demands continue to grow faster than centralized cloud infrastructure can scale, the shift is becoming less ideological and more practical. The goal isn’t to abandon AWS or Google Cloud entirely, but to build fault-tolerant, distributed systems that reduce reliance on any single provider.
In this emerging landscape, smaller infrastructure providers, regional data centers, and decentralized networks have an opportunity to fill gaps left by Big Tech’s giant data centers—helping crypto’s infrastructure finally catch up with its decentralized ideals.
