Decentralisation in the context of blockchain describes the transfer of power and decision-making from a centralised entity (an individual, an organisation, or a collection of such entities) to a dispersed network. Transactions made possible by decentralisation are trustless and tamper-proof since they don’t rely on a single middleman. It can be argued that the foundations of cryptocurrencies are built up on their decentralised nature, and so when recently in an interesting tweet by Maggie Love, founder of W3BCLOUD, a Web3 compute and storage infrastructure provider, questioned this, an interesting series of talking points were raised.
Decentralised Tech Built on Centralised Cloud
Due to its decentralised blockchain technology and second-largest market cap, Ethereum allows anybody to set up a node and participate in the network’s operation. Such Ethereum network users frequently host their nodes using cloud computing services.
The majority of nodes on the Ethereum network—nearly 62% of them—use cloud hosting services like Amazon, according to data from Ethernodes.org. Currently, 10% of Ethereum nodes are hosted by Hetzner, which is currently used by 14% of those hosted nodes.
Since Ethereum depends so heavily on cloud administrations like Amazon, which accounts for 50% of all enabled Ethereum nodes, Maggie Love stated that Ethereum needed sufficient decentralisation.
The tweet likewise named Hetzner (a data centre operator based in Gunzenhausen, Germany), who said its administration is not to be utilised for things connected with crypto, including Ethereum. Involving their items for any application connected with mining, in any way whatsoever related, isn’t allowed, the company responded in a Reddit post.
“This includes Ethereum. It includes proof of stake and proof of work and related applications. It includes trading. It is true for all of our products, except colocation. Even if you just run one node, we consider it a violation of our ToS.”
Hetzner added that they know that there are numerous Ethereum clients presently at Hetzner, and they have been examining how they can best resolve this issue.
However, this doesn’t just stop there.
Circumventing Central Points of Failure
Because the majority of Ethereum nodes are in the hands of centralised web providers like Amazon Web Services (AWS). It exposes it to several central points of failure. This along with the high cost of infrastructure involved in the development only makes the usage of cloud computing services more likely, causing a bit of a spiral effect occurring in my opinion. This can be supported in a report by Messari.io
On the other hand, a user by the name of Toly brought up an intriguing issue in a response to Maggie’s tweet.
ASN means an Autonomous System Number. An ASN is a number assigned to a local network, registered into the carrier’s routing community and placed under the umbrella of an administrative domain called an autonomous system.
However, this does continue to raise a few additional problems because it is evident from the distribution of Nodes around the globe that the United States of America continues to have a close majority with 44.19% and Germany with 10.73%. Thus, this would be responsible for about 55% of distributed Ethereum nodes globally. Therefore, governmental interference from either of these two nations might have a significant negative effect on Ethereum’s node-level decentralisation.
In summary, I think for the next step it’s important to observe what Hetzner does to resolve their ToS violation and whether something like this could occur once again in another cloud computing service such as Amazon.