The recent Amazon Web Services (AWS) outage that disabled major crypto and fintech platforms, including Coinbase, Robinhood, MetaMask, and Venmo, has reignited the debate about how decentralized Web3 really is.
While blockchains 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 layer, but not yet at the infrastructure layer,” Jamie Elkaleh, CMO at Bitget Wallet, told Cointelegraph. “True resilience depends on diversifying beyond hyperscalers into community-powered distributed networks.”
Elkaleh added that full decentralization is “not yet feasible at scale” because most teams rely on hyperscalers like AWS, Google Cloud and Azure for compliance, speed and uptime. The practical goal, he said, should be a “credible multi-home” infrastructure, distributing workloads across the cloud and decentralized networks to avoid single points of failure.
Elkaleh argued that cloud providers offer scalability and security, but at the cost of concentration risk. “If one region or service provider goes down, hundreds of applications will be affected,” he said. Hybrid systems, which combine the cloud with decentralized storage and community-managed nodes, are the next logical step.
Related: Amazon AWS outage hits Coinbase mobile app, Robinhood
Users are denied access to blockchains
Anthurine Xiang, co-founder of EthStorage and QuarkChain, said the outage proved that “even in Web3, many services still depend heavily on centralized infrastructure.”
She explained that true decentralization requires redesigning every layer, from storage to access, so that no single provider can shut down the systems. “It’s like the house is fine, but the door is stuck,” Xiang said, describing how users were locked in the working chains of the blocks.
The outage started on Monday and lasted for about 15 hours. The outage caused Coinbase’s app and Base network to crash, preventing users from logging in or making transactions, while Robinhood traders reported delays and API crashes.
MetaMask was also affected by the outage, with users reporting seeing zero balances in their wallets. “Their assets were safe, but the service responsible for retrieving balance data was offline,” Xiang explained, noting that it was not a technical failure of the blockchain itself.
Meanwhile, Jawad Ashraf, CEO of Vanar Blockchain, criticized the crypto industry for “working on the same servers.” He claimed that approximately 70% of Ethereum nodes are hosted by AWS, Google or Microsoft. “We’re just paying three different landlords instead of one,” he said.
Building fully decentralized systems is possible, he added, but “most teams aren’t going to do it anytime soon” because it’s slower and more complex than spinning on AWS.
A wake-up call
Elkaleh said the disruption should accelerate investments in decentralized cloud, storage and computing networks such as Akash, FilecoinArweave and others. He urged Web3 builders to embrace hybrid models that combine traditional reliability with distributed redundancy.
“Every major disruption is a wake-up call,” he said. “The future of Web3 will not be defined by how decentralized tokens are, but by how truly distributed the infrastructure becomes.”
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