On November 11th, the Ethereum community witnessed Infura outages. Infura acts as Ethereum’s infrastructure provider that many companies rely on to monitor blockchain transactions. The service outage forced many crypto companies to halt user activities, which sparked concern across the market. Industry experts familiar with the issue shared their thoughts on the significance of this event.
Ethereum Infura Outage
Infura, the Ethereum infrastructure provider, experienced a major service outage yesterday. The problem was quite significant, especially since it caused delays in Ethereum price feeds and ERC-20 tokens. Infura operates Ethereum nodes for companies and other entities that are working on ETH. Once Infura went down, it created an environment where companies were unable to monitor activity on the Ethereum blockchain. With a lot of companies relying on Infura for Blockchain data, many argue this goes against the whole idea of decentralization. If operations depend on a centralized party such as Infura, one could argue that companies are not truly operating in a decentralized manner.
Nikita Zhavoronkov, a lead developer for Ethereum, stated the issue arose from an alteration in the code that resulted in a chain-split. Providers in the industry who were not updating their nodes got stuck on a minority chain. Infura happened to fall into this bucket. The issue trickled down to large exchanges such as Binance and Bithumb. Both of these exchanges had to halt ETH and ERC-20 token withdrawals for a short while.
Industry Feedback
The issue with Infura exposed the concept of decentralization. When you have crypto providers and projects relying on a single entity, it essentially demoralizes crypto’s main driver of decentralization. Instead of relying on centralized parties, companies have the ability to operate their own nodes. This could lower systematic risk for thousands of projects that rely on data providers such as Infura.
Hermez Network, a decentralized zero-knowledge rollup that scales the Ethereum network, commented on the Infura outage. Pol Lanski from the tech team at Hermez told Visionary Financial:
“Trusting one single party to be your only service provider is throwing all the benefits of decentralization in the trash. If this party goes down, everything goes down. Designing any blockchain service without decentralization is anchored to a legacy mindset of infrastructure. When designing anything on top of blockchain, you must consider how are you going to decentralize the failure points to make your service resilient – even when in the name of efficiency you want only one coordinator (like we have in Hermez Network) – the protocol needs to incentivize a healthy network of other nodes which can pick up the work, should something go wrong. We have the tools and incentive mechanisms to do that. We should not get stuck in the Web2 mindset.”
As mentioned above, companies can choose to run their own nodes to create a more decentralized environment. Ben He, the CEO of imToken also told Visionary Financial that:
“At imToken we run our own Ethereum node infrastructure, because we can optimize it for our users and ensure the reliability of our service. The incident with Infura shows that it’s key for wallets to be more decentralized to avoid this happening. The whole point of decentralisation is that the user is in full control. As an industry, we will await and see how we can learn from this.”
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