Blockchains like Ethereum’s are often pitched as self-sovereign money networks that operate independently of states, financial institutions, and corporations — but recent research shows this might not be reality.
As it turns out, it’s really centralized cloud services hosting most of the Ethereum network, with 61.6 percent of Ethereum nodes running in the cloud.
Uncomfortably, Amazon Web Services (AWS) indirectly operates nearly 25 percent of all Ethereum nodes, reports cloud services provider Chainstack through data shared with Hard Fork.
Mapping Ethereum’s problem with the cloud
Analyzing the Ethereum network in this way is possible due to the “Ethereum discovery protocol,” the mechanism nodes use to find each other and join the network.
The 💜 of EU tech
The latest rumblings from the EU tech scene, a story from our wise ol' founder Boris, and some questionable AI art. It's free, every week, in your inbox. Sign up now!
This process essentially forces all nodes to maintain a list of other nodes in the network over the past 24 hours.
So, to figure out who hosts Ethereum, Chainstack pulled data from ethernodes.org, a third-party blockchain explorer that runs its own nodes. This gave the firm a complete list of Ethereum nodes and their IP addresses.
Now, all internet routing services (such as cloud providers) can be identified by their unique “Autonomous System Number” (ASN), and every IP address can be mapped to an ASN.
Using a free lookup tool, Chainstack cross-referenced IP addresses of nodes against a maintained list of ASNs, later matching them with those of known cloud hosting providers.
This allowed analysts to easily see which node was hosted by what company, and exactly how many weren’t hosted by any third party at all.
Top 10 centralized services keeping Ethereum online
As of September 20, 2019, Chainstack analysts determined the Ethereum network was comprised of 8,933 nodes.
Just 38.4 percent (3,434) of those were hosted fully independently (self-sovereign), and 61.6 percent (5,499) of the network was running in the cloud.
Even worse, the top 10 cloud hosting providers amounted to 57.3 percent of all Ethereum nodes, with AWS hosting significantly more than any other provider.
Together, Alibaba Cloud, Google Cloud Platform, DigitalOcean, and Hetzner were also hosting a big chunk of the network.
The problem goes deeper: those cloud nodes aren’t exactly distributed evenly around the world; Chainstack determined 34 percent of Ethereum’s cloud nodes were hosted in the United States.
Should Bezos be trusted with so much of Ethereum’s network?
Let’s say Big Bad Bezos woke up tomorrow with a bone to pick with Ethereum. If it helps, imagine Amazon was about to release its own blockchain and a cryptocurrency to match.
In this scenario, it’s technically possible that 25 percent of the network might suddenly go dark, damaging its efficiency (and ultimately its price).
If the rest of the cloud providers were to restrict Ethereum nodes as well, more than half of the network could disappear overnight.
This is obviously bad news for a blockchain that’s supposed to be decentralized.
The wider cryptocurrency ecosystem has similar problems
Ethereum isn’t alone in its overt reliance on centralized cloud hosting services, either. In November last year, major cryptocurrency exchanges were forced offline after AWS suffered service interruptions across South Korea.
More recently, a large number of cryptocurrency exchanges had troubles with erratic market data due to AWS failures. Binance reported problems with withdrawals as a result.
Still, this research indicates the Ethereum network relies on centralized services in addition to Infura — the backbone for an overwhelming majority of its apps.
(Interestingly, Chainstack CTO Eugene Aseev told Hard Fork he estimated between a quarter and one half of Ethereum nodes running on AWS were operated by Infura).
In the current political climate, Ethereum’s relationship with cloud services likely isn’t a problem, but if it gets any worse, Ethereum might find itself in a tough spot when the world needs cryptocurrency the most: when it all goes to shit.
Want more Hard Fork? Join us in Amsterdam on October 15-17 to discuss blockchain and cryptocurrency with leading experts.
Get the TNW newsletter
Get the most important tech news in your inbox each week.