The Future of the Internet: The Race to Web3 Infrastructure

We interact with open source applications (such as MetaMask, Web3 games, metaverses, and DeFi protocols) every day, but don't often stop to think about what needs to be done behind the scenes to work properly. If we think of Web3 as a booming new city, node infrastructure providers are the underlying grid that makes operations possible.

All DApps need to communicate with the blockchain, and full nodes can satisfy billions of requests from DApps to read and write data to the chain every day. We need a huge node infrastructure to keep up with the vastly expanded DApp ecosystem and meet all demands. However, running a node is very time and capital consuming, so DApp generators turn to providers to access nodes remotely. Infrastructure providers have huge monetary incentives to power as much of the Web3 ecosystem as possible, but who is leading the race so far?

centralization problem

The fastest way to provide a reliable infrastructure for a DApp ecosystem is for a centralized company to build a fleet of blockchain nodes, usually located in an Amazon Web Services (AWS) data center, and allow developers to access it from anywhere to subscribe. This is exactly what a handful of players in the space do, but it comes at the cost of centralization. This is a major problem for the Web3 economy as it leaves the ecosystem vulnerable and at the mercy of a few powerful players.

Consider that more than 80% of Ethereum nodes are located in the US and Germany, and that the three largest mining pools could combine to attack 51% of the network. In many respects, blockchains today are far more centralized than we would expect, in stark contrast to the spirit originally articulated in Satoshi Nakamoto’s Bitcoin (BTC) white paper.

If large node providers collude with each other, Web3 will lose all its advantages over Web2, from censorship resistance to trustworthiness, and will only get stuck with its disadvantages, from relatively high fees to lower transaction throughput.

Not only that, but reliance on centralized providers also opens the door to outages. For example, an outage at Infura had forced cryptocurrency exchanges and wallets such as Coinbase Wallet, Binance, and MetaMask to suspend Ethereum and ERC-20 token withdrawals because they could not fully rely on nodes.

It’s also worth noting that Amazon, the backbone of many of these centralized providers, has suffered multiple outages in the past, creating another layer of vulnerability. Ethereum’s Infura outage was not the only one. Most recently, ethereum's migration to ethereum 2.0 was hampered by a seven-hour outage due to a hardware failure of a single node on the network. This is a risk that a truly decentralized web doesn't have to worry about.

Decentralization is a key tenet of the Web3 economy, and centralized blockchain infrastructure could undermine this tenet. For example, Solana suffered multiple outages due to a lack of enough decentralized nodes to handle the surge in traffic. This is a common problem for blockchain protocols trying to scale.

Not just Solana, many top blockchain protocols are trying to find ways to scale and become more decentralized. In fact, while large blockchains like Ethereum and Bitcoin have been steadfast in the war on decentralization, smaller blockchains have lost the war, suffering from overly centralized node providers. 51% attack.

For example, on June 8, 2013, Feathercoin (FTC) was 51% attacked. This means that a single entity is able to control more than half of the total processing power of the FTC network. This allows them to reverse confirmed transactions and even stop new transactions.

At the same time as the FTC attack, the site was hit by a DDoS attack. This makes it difficult for users to access information about attacks or attempt to withdraw their money from the network. The FTC has since become nebulous. Its price plummeted and it is no longer listed on major exchanges.

This historical centralization is due to an over-reliance on Web2 cloud providers such as AWS and Infura, which have so far been the dominant providers of infrastructure for the Web3 economy. But now, to avoid centralization and blockchain’s “single point of failure,” decentralized infrastructure providers are growing rapidly. This is great news for the prospects of the Web3 ecosystem remaining healthy and decentralized.

Decentralized infrastructure offers a better solution

Thankfully, recent innovations are giving birth to a more decentralized provider. These providers run local nodes, or even nodes in users' homes, rather than relying on centralized cloud providers.

While centralized providers took the lead, decentralized providers are emerging as an extremely viable alternative. Their main advantage is that they cannot be brought down by a single point of failure and in many cases provide faster connections for users across the globe. Additionally, decentralized node infrastructure providers create new economies where independent providers service data requests and are rewarded with native tokens within them. This new breed of provider is rapidly gaining market share and may even eventually displace existing providers of Web3 infrastructure.

competition intensifies

There are many different providers in this space, such as Ankr, Flux, and QuickNode, competing for market share. This playing field is good for the Web3 economy because it brings innovation and drives prices down. It also ensures that providers are constantly striving to improve their services to provide customers with the best possible experience.

More importantly, decentralized infrastructure competition promotes further decentralization of the Web3 economy. This is a good thing because it makes the economy more resistant to attacks and censorship. Infrastructure providers are spread across different regions, making 51% attacks a thing of the past.

This competition among providers is critical to maintaining a healthy and decentralized ecosystem.

Realizing the promise of Web3

The promise of Web3 is not just to build a better internet, but to build a better world. Decentralized infrastructure providers are laying the groundwork for a new internet — one that is fairer, safer, and more censorship-resistant.

By simply maintaining the status quo, centralized hosting providers cannot deliver real innovation and are vulnerable to scrutiny. On the other hand, decentralized infrastructure providers are incentivized to push the envelope and provide the best possible service within a democratic structure, ensuring that they are more resistant to censorship and defense against attacks.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.