AWS Outage Disrupts Crypto Exchanges, Raising Questions About Web3’s Centralized Backbone

On Tuesday, a connectivity issue at Amazon Web Services' (AWS) data center disrupted several major cryptocurrency exchanges, including Binance, KuCoin, and MEXC.

AWS is currently the largest cloud provider, holding over 30% of the global market, according to Statista. It powers everything from streaming platforms to crypto exchanges and sits well ahead of its closest competitors: Microsoft Azure at 21% and Google Cloud at 12%. Together, these "Big Three" cloud giants control more than 60% of the rapidly growing market, while all other providers remain in the low single digits.

The AWS disruption led to failed orders, inaccurate charts, and asset transfer delays on several exchanges. Although AWS service has since resumed, the outage has sparked an important debate within the crypto community: Is decentralized infrastructure too dependent on centralized platforms?

“This latest outage at AWS is another example of the enormous vulnerability of the global cloud in the hands of a few centralized providers,” said Kai Wawrzinek, co-founder of Impossible Cloud Network. “As demand for cloud capacity grows, the risk of single point of failure increases, as does the risk of hacks, and vulnerability to political wrangling over the production of semiconductor chips and trade tariffs.”

Too Big to Tackle

Despite the presence of more than 29 decentralized cloud and storage providers today, Big Tech still maintains a significant lead, Wawrzinek explained. This is primarily due to AWS’s strong market dominance and the huge capital advantage that incumbent providers have.

He added that many Web3 builders continue to rely on familiar centralized services, even when it contradicts their decentralization ethos.

“In this transitional phase from Web2 to Web3, the massive downsides of centralized models are showing,” Wawrzinek said. “It is only a matter of time before Web3 wakes up to the fact that the only way to scale the global cloud and internet reliably is through decentralized models that don’t carry the myriad of risks that centralized models do.”

These risks include even brief interruptions that can ripple across industries, especially crypto, where speed is crucial. “These cloud providers can unilaterally decide to shut down access to applications—cutting off users entirely,” Jonathan Schemoul, CEO of Aleph Cloud, told The Defiant.

Furthermore, Schemoul emphasized that any data stored on centralized clouds is no longer fully private. It can be exploited for purposes such as marketing, or more concerning uses like surveillance.

Barriers to Change

Experts point to perception, convenience, and legacy integrations as the biggest obstacles preventing crypto platforms from adopting more decentralized or independent hosting solutions.

Wawrzinek noted that most blockchains and protocols are still hosted on Web2 infrastructure.

EtherNodes reveals that 36% of the Ethereum network is hosted on AWS alone. Solana appears similarly dependent, with experts estimating that more than half of its nodes also run on legacy cloud services.

Todd Ruoff, CEO of Autonomys, called the AWS outage a stark reminder of the infrastructure dependencies still underpinning much of the crypto ecosystem. “While blockchain networks are designed to be decentralized, a large portion of their node infrastructure—especially on Ethereum and Solana—relies on centralized cloud providers like AWS,” he said.

This concentration, Ruoff explained, introduces serious vulnerabilities, from service disruptions to concerns around network resilience and censorship resistance.

“This reliance poses systemic risks—everything from network latency to outright outages,” Ruoff said. “As the industry matures, reducing reliance on single points of failure will be critical to achieving the level of decentralization and robustness that Web3 aspires to deliver.”