REALITY CHECK | Over 1/3 of Ethereum Nodes Are on Centralized AWS Cloud Servers

This week, an outage at Amazon Web Services (AWS) sent ripples across large swathes of the internet – and exposed a harsh truth about the crypto ecosystem: while many blockchains claim to operate in a decentralised manner, much of their infrastructure still relies heavily on the same centralised services.

The Incident

AWS reported that a DNS-resolution failure in its US-EAST-1 region triggered cascading disruptions across more than 50 digital services, including major cryptocurrency platforms like Coinbase.

Among the casualties were major wallets, exchanges, and layer-2 networks built on Ethereum. For instance, the layer-2 network Base (developed by Coinbase) confirmed its infrastructure was impacted.

Similarly, node-provider Infura – which caters to many Ethereum-ecosystem apps (including wallets like MetaMask) – reported connection problems across networks like Polygon, Arbitrum and others.

The Underlying Issue: Centralisation in a “Decentralised” Ecosystem

One of the striking numbers: according to data from Ethernodes, AWS is hosting around 2,368 execution-layer nodes of Ethereum – roughly 36 % of the network as of this writing.

That concentration means that a technical failure of a major cloud provider can materially weaken infrastructure supporting these networks, despite their decentralised ethos.

As one portfolio-tracker founder put it:

“The whole vision behind blockchain was decentralised infrastructure, which we have completely failed on.”

While the blockchain (in this case, Ethereum) itself likely did not halt – because other nodes are run on different platforms or self-hosted – the incident underscores that “decentralisation” is often more aspirational than factual when large portions of infrastructure are routed through a few providers.

Running independent, self-managed nodes remains technically and economically demanding (requiring hardware, bandwidth, reliable power). Thus many projects opt for managed services or major cloud providers for convenience and scalability – but that convenience comes at the cost of structural risk.

Added Context: Ethereum’s Decentralisation & Its Challenges

To better understand why this matters, here are some extra dimensions on Ethereum’s decentralised promise – and the controversies it has encountered.

Decentralised Nature & Intent

• Ethereum was designed as an open-source, permissionless blockchain platform that enables smart contracts and decentralised applications (DApps).
• The transition, known as the Ethereum Merge (September 2022), moved Ethereum from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism – reducing energy use and shifting how validation is done.

Controversies & Centralisation Risks

• Validator & staking concentration: With PoS, those who stake large amounts of ETH gain more influence. Some analyses argue this creates oligopolistic control, because large validators can dominate block production or influence governance.
• Governance influence: Some core developers have warned that corporate/VC influence may distort Ethereum’s ethos. For example, a recent developer cited concerns that the venture-fund firm Paradigm’s growing role in Ethereum infrastructure and tooling constitutes a “tail risk” for the ecosystem.
• MEV & builder market centralisation: Studies show that in Ethereum’s “builder” market (entities that prepare blocks and propose them to validators) just two builders produced over 85 % of blocks in a sample period — raising questions about decentralisation in practice.
• Sanctions & censorship vulnerability: Post-Merge, more than half the network’s blocks reportedly complied with U.S. sanctions, which critics argue undermines the notion of uncensorable, permissionless infrastructure.
• Infrastructure dependencies: As we saw in the AWS incident, many DApps, wallets and networks rely on centralised infrastructure – cloud providers, node APIs, commercial services – which ironically creates central points of failure. The Bank for International Settlements’s review of DeFi noted that while decentralisation is the goal, “some centralisation is unavoidable.”

Key Takeaways

• The recent AWS outage acts as a reminder: decentralisation isn’t just about the blockchain consensus layer – it’s also about infrastructure, the distribution of nodes, clients, services and the ecosystem built on top.
• For users and projects, it means that while the blockchain may remain “running,” applications, wallets and services may still be vulnerable to central-infrastructure failures or regulatory pressure.
• For Ethereum’s long-term health and credibility, maintaining a broad, diverse validator ecosystem, robust infrastructure beyond major clouds, and governance models resistant to capture will be key to living up to the “decentralised” promise.

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