The decentralization debate: How decentralized is the Web3 backend?

When people talk about decentralizing control over the internet, they often forget how much they rely on centralized infrastructure. However, to establish the vision of Web3, everything needs to be decentralized, including all backends. Ankr has been pushing hard to further decentralize Web3 infrastructure across the board with the help of community-run nodes.

Momentum builds for service providers aiming to decentralize the Web3 infrastructure. Whereas companies like Infura and Alchemy also provide mainstream players with access to network nodes – for earning staking rewards or otherwise – they do not maintain – as apparent in this Epicenter interview with Alchemy Co-founder and CEO Nikil Viswanathan – a decentralized approach. 

That became apparent in April of 2022 when an Infura outage shut down MetaMask and almost all Ethereum applications. It was the second major outage in six months, making many people wonder how decentralized Ethereum truly is. 

Instead, the time has come to turn users into owners. Ankr builds the infrastructure to connect the digital economy with layer-1 networks, projects, and protocols. Infrastructure is the backbone of any industry, and Web3 – which revolves around user empowerment and decentralization – requires decentralized infrastructure.

Why Things Need To Change

When providers like Infura suffer from an outage and temporarily cripple the Ethereum ecosystem, it is a stark reminder of the centralized nature of the internet’s backbone. An infrastructure-as-a-service provider for Web3 shouldn’t aim to be the “Amazon AWS of the decentralized internet” but rather put the decentralization principle front and center.

A recent essay by cryptographer Matthe Rosenfield highlights a pressing matter. In the findings, he mentions how blockchains themselves are decentralized, but the activities facilitating their on-web interactions pass through centralized companies. The use of application programming interfaces  (APIs) is one aspect that warrants further decentralization rather than relying on a handful of providers. 

Thankfully, things head in the right direction through providers like Ankr, Flux, and QuickNode, among others. These decentralized providers cannot be taken down through a single point of failure and often provide a faster connection to users globally. Furthermore, decentralized node infrastructure providers establish new economies for independent providers to serve requests to earn rewards. 

The Current State of Web3 Infrastructure

Taking a look at Ethereum as an example, the number of hosted nodes still outweighs residential, business, or college nodes. Over 67% of the network nodes are hosted,  with 45% of them residing on AWS. Other popular providers include Hetzner, Digital ocean, OVH, Oracle Cloud, and Google Cloud. A good example of centralized infrastructure that highlights the appeal of solutions like Ankr and its decentralized community-run nodes.

One can find similar criticism in the NFT space, where relevant non-fungible token data isn’t always stored on the blockchain. Instead, NFTs often point to a URL containing the data, which is often a virtual private server belonging to the world’s Amazons, Googles, and Alibaba. Metadata of non-fungible tokens is a crucial aspect, yet it is handled rather poorly today. 

Most of these issues can be avoided if people were willing to run their own nodes. However, while anyone CAN do so, it doesn’t mean they WILL. Decentralized infrastructure providers can streamline the concept of running one’s own node, but without the learning curve newcomers would be faced with otherwise. 

Furthermore, projects like Ankr address the node issue and provide access to premium API and RPC endpoints with WebSockets without compromising decentralization. Its globally distributed node infrastructure lets users access top ecosystems, including Ethereum, Avalanche, Binance, Clover, Polygon, Fantom, etc. 

Conclusion

There is some concern over the centralized nature of certain aspects of Web3 infrastructure today. Relying on APIs, RPC endpoints, and noes provided by centralized entities or hosted on servers owned by Google, Microsoft or Alibaba is a problem. It can expose user data to prying eyes and provides an unnecessary security risk through central points of failure. 

As competition heats up among decentralized infrastructure providers, interesting things are bound to happen. Projects like Ankr connect with various blockchains and establish a multi-chain future. Moreover, its technology powers dozens of proof-of-stake blockchains, each of which is compatible with the team’s native tools. The transition from centralized to decentralized Web3 infrastructure is ongoing, but more work is needed.