Periodic service disruptions and capacity strain on centralized cloud infrastructure have created an opening for companies building distributed networks. Supporters of the distributed approach argue that spreading workloads across several smaller nodes reduces concentration risk. They say the model could be especially valuable in sectors with high computing demand and low tolerance for downtime, such as AI, gaming, and finance.
“Over time, as decentralized infrastructure matches or exceeds the performance of centralized clouds, reliance on single providers will naturally decline,” Carlos Lei, CEO and co-founder of DePIN-based connectivity marketplace Uplink, told Cointelegraph.
### Centralized Cloud Dependency and Its Risks
In today’s tech landscape, decentralized infrastructure often refers to blockchain technology, which is designed to distribute trust and reduce single points of failure by spreading verification and data storage. However, the infrastructure that enables access to these networks still largely relies on centralized cloud platforms.
In 2024, Amazon Web Services (AWS), Microsoft Azure, and Google Cloud—also known as the “Big Three”—accounted for around 68% of global cloud infrastructure revenue, according to Synergy Research Group. This dominance makes them the default hosting environment for many enterprise and blockchain applications.
But this concentration carries risks. Outages, pricing changes, or regional capacity limits at any one of these providers can ripple across multiple industries.
“For example, with the AWS outage in October, Snapchat, Roblox, Fortnite, Kindle—all of them went down completely,” Nökkvi Dan Ellidason, CEO of tech infrastructure company Gaimin, told Cointelegraph. “Coinbase, which is a financial service, was affected massively.”
### Trade-Offs of Moving Away from Centralized Cloud
The Big Three platforms help lower upfront costs by providing support programs for startups. However, moving away from centralized cloud providers usually means companies must take back all setup and maintenance work that these providers have handled for years—and often pay more to do it.
Despite these trade-offs, some companies are testing alternatives through what industry insiders call “modular shifts.” For example:
– **Filecoin** and **Arweave** are used to store data and metadata outside traditional clouds.
– **Akash** and **Render Network** offer decentralized options for computing and 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 Reliance on Centralized Clouds Undermines Decentralization
Blockchain networks are designed to distribute trust and remove single points of failure. Yet much of their infrastructure still runs on centralized cloud platforms.
Across major proof-of-stake networks, a significant share of validators operate on commercial cloud infrastructure rather than independent hardware. A study presented at the Usenix Security Symposium in August identified AWS as the single largest hosting provider among Ethereum validators, accounting for roughly one in five.
Similarly, a 2023 analysis by Messari showed that most validators and stake hosting rely on centralized servers.
“Many operators choose centralized cloud platforms like AWS or Google Cloud because they deliver predictable performance, easy setup, and reliable uptime,” Lei explained. “These platforms have become the backbone for many Web3 networks because they simplify the complexities of scaling and maintaining infrastructure.”
This reliance is usually invisible to users—until an outage occurs. During the AWS outage on October 20, Coinbase users reported problems logging in, placing trades, and withdrawing funds. Robinhood traders experienced execution delays and API errors.
### Hybrid Cloud Models and Distributed Infrastructure on the Rise
The growing strain on centralized cloud systems has inspired a wave of infrastructure projects exploring distributed alternatives. These networks aim to harness capacity from consumer hardware, regional data centers, and idle computing power.
Gaimin, for example, sources GPU power from gaming PCs and supplements it with smaller regional data centers. According to Ellidason, this approach creates a geographically dispersed network where no single region becomes a point of failure.
Uplink applies a similar concept to bandwidth by enabling individuals and local operators to sell excess connectivity to applications needing broader coverage, thereby reducing reliance on major telecom carriers.
Many researchers and node operators envision the future as hybrid rather than fully decentralized: a blend of hyperscalers, edge networks, and bare-metal servers with traffic automatically rerouted when one region goes down.
“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.”
### The Path Forward: Building Fault-Tolerant, Resilient Systems
As demand for computing power continues to outpace cloud capacity, the shift isn’t about abandoning AWS or its peers altogether. Instead, it’s about making the entire system more fault-tolerant and creating space for smaller, regional infrastructure providers to fill gaps where large data centers fall short.
This evolution towards a more distributed and hybrid infrastructure model promises increased resilience for industries with critical uptime requirements, including AI, gaming, and finance, driving innovation and stability in the cloud ecosystem.
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