To prevent centralization and blockchain’s infamous “single point of failure,” decentralized infrastructure providers are gaining significant traction. This bodes well for the likelihood that Web3 ecosystems will stay robust and decentralized.
The first iteration of the World Wide Web comprised web pages that were static. Academics and internet critics refer to this period, which included the majority of the 1990s, as Web1. Web2, in the early 2000s, enabled interactive websites such as Facebook, YouTube, and Wikipedia, where users could post, edit, and share content. Typically, these websites rely on logins, profiles, and embedded content. Significantly, they fostered the emergence of user-generated content and provided individual content providers with leverage and income sources.
Web3 envisions the hardware and software of the internet transferring from the corporate campuses of tech corporations to distributed computer networks owned and controlled by no single organization.
According to a widely shared article by cryptographer Matthew Rosenfeld, often known as Moxie Marlinspike, the founder of the encrypted messaging software Signal, there is a weak link in the concept of Web3. Numerous activities that make blockchain-based online activity feasible rely on a small number of private organizations.
The concept of decentralization is trendy these days, but it’s vital to realize that web3 is built on top of centralized cloud infrastructure. Therefore, Web3 can only be as decentralized as its supporting infrastructure. Currently, most cloud computing and data storage infrastructures are largely centralized, which implies that web3 applications are likewise susceptible to these centralized control points.
All DApps must connect to blockchains, and every day, billions of requests from DApps to read and write data to chains get processed. We need a massive node infrastructure to keep up with the rapid expansion of DApp ecosystems and fulfil all requests. However, operating nodes is very time and cost-intensive; therefore, DApp developers want remote access to nodes from providers. Infrastructure providers have a substantial financial incentive to power the Web3 ecosystem.
The centralization problem
The quickest option for centralized enterprises to provide reliable infrastructure to fuel DApp ecosystems is to build several blockchain nodes in AWS data centres and enable developers to use them from anywhere for a fee. A few participants in the market accomplished just that, albeit at the cost of centralization. This has left the ecosystem susceptible to threats and at the mercy of a few strong entities.
Contrary to Satoshi Nakamoto’s initial Bitcoin whitepaper, modern blockchains are far more centralized than desired. If collusion of major node providers happens, Web3 will lose all of its merits over Web2, including censorship resistance and trustworthiness. It would be left with just its shortcomings, including comparatively expensive fees and poor transactional throughput.
In addition, relying on centralized suppliers opens the prospect of service interruptions. For instance, an Infura outage caused Coinbase Wallet and Binance to cease ETH and ERC20 token withdrawals since they could not rely on their nodes. Notably, Amazon has had several failures in the past, providing an additional layer of vulnerability.
Decentralization is a fundamental principle of the Web3 economy, and centralized blockchain technology threatens its viability. Solana, for instance, has had several failures owing to an insufficient number of autonomous nodes capable of handling traffic spikes. This is a prevalent issue for blockchain technologies attempting to grow.
This historical concentration is due to the excessive dependence on Web2 cloud providers, such as AWS and Infura, who have been the dominant infrastructure suppliers for the Web3 economy so far. To prevent centralization and blockchain’s infamous “single point of failure,” decentralized infrastructure providers are gaining significant traction. This bodes well for the likelihood that Web3 ecosystems will stay robust and decentralized.