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Amazon Managed Blockchain supports Ethereum

Amazon Managed Blockchain, a service of AWS, added support for Ethereum. Now it’ll be easier for devs to build on its blockchain.

Starting February 2021, Amazon Managed Blockchain, a subdivision of Amazon Web Services (AWS) announced it will start supporting the Ethereum network. With this implementation, users will be able to connect to the mainnet and two other testnets: Rinkeby and Ropstein.

The service will also monitor and replace unhealthy nodes, along with other features that will improve the user experience of Ethereum. According to the official statement:

“With Amazon Managed Blockchain, customers get secure networking, encryption at rest and transport, secure access to the network via standard open-source Ethereum APIs, fast and reliable syncs to the Ethereum blockchain, and durable elastic storage for ledger data.”

Amazon Managed Blockchain, in fewer words, allows users to operate an Ethereum node without actually running a node. Users will connect to it using the cloud servers provided by AWS.

This news might create confusion if we take into account that, by 2019, a study showed that 25% of Ethereum nodes ran in the AWS cloud. However, the difference is that Amazon Managed Blockchain will also monitor and fix broken nodes, and ease the usage. Previously, they were merely stored in the cloud service.

Managed Blockchain, according to official documentation, can be used to create resources using its SDK and Management Console. It works as a framework to build on it, rather than simple cloud storage.

Managed Blockchain manages your certificates, lets you easily create proposals for a vote among network members where applicable, and helps you track operational metrics related to requests, computational load, memory usage, and data storage.

The feature is already in place and is only available in North Virginia (USA), Singapore, Tokyo, Seoul, London, and Ireland.

Great news for Ethereum…

The announcement comes one day after Jeff Bezos, long-time CEO of Amazon, will step down from his role by Q3. He will then be an Executive Chair on the Board and his current role will be taken by Andy Jassy.
The reason this is important is that Jassy is currently the CEO of AWS (and has been since its creation). Under his term, AWS deployed all its blockchain initiatives, and we can expect a wider crypto adoption from Amazon after the succession is undertaken.

According to Mike Godsey, head of product at Infura, an infrastructure provider for Ethereum, stated:

It’s an incredible signal for the value of Ethereum in modern applications to have a big player like AWS get serious about tooling. This will inevitably expand the developer base using this technology and that is great for the whole ecosystem.

The choice of Ethereum, however, is not surprising. In the last year, this network has been massively used to build a myriad of DeFi applications. This flood of users and transactions caused big congestion and sent gas prices to the roof, hindering app development.

According to Amazon, it’s complicated and time-consuming for users to build on Ethereum, due to node issues and scaling challenges. And this can change thanks to Managed Blockchain integration.

…or maybe not?

On the other hand, this could turn the Ethereum network even more centralized than it already is. Back in 2019, as I referred above, it was revealed that 25% of Ethereum nodes ran in AWS. As of today, Amazon clouds store 42% of Ethereum nodes.

Ethereum nodes hosting. Source: Ethernodes
Ethereum nodes hosting. Source: Ethernodes

Why is it bad, though? Well, cryptocurrencies were born to decentralize finance (and then applications and so on). The real whole basis of it is that it’s not centralized in a single entity, as fiat money is centralized by banks.

If Amazon controls almost half of the network processing power and it one day suddenly decides to shut it down (or even if it happens as an accident), the Ethereum network won’t be able to process all transactions. This could not only affect its operations but also lead to a market crash.

The whole point of being decentralized is to be protected against censorship and technical issues. With nodes being scattered around the world, an issue with one (or even a few) has no effect on the whole network.

Moreover, if Amazon ever plans to launch its own full operative blockchain, it already has a hold on the second biggest one in the market.

Chainsplit

Back in November 2020, the Ethereum blockchain split due to an upgrade failure. According to Blockchain developer Nikita Zhavoronkov, a group of devs changed the Ethereum code and those who hadn’t upgraded got stuck on a minority chain. This caused a hard fork in the main chain because both versions weren’t compatible.

The developer states that this issue raises a lot of concern on the Ethereum ecosystem and shouldn’t be underestimated.

This event had a bigger impact than it should have due to, among other things, node centralization. One of the services that didn’t upgrade the software on time was Infura (where Mike Godsey works). Infura nodes are used by big and popular DeFi protocols like CryptoKitties, Uniswap, Maker, Metamask, Compound, and 0x.

So, Infura’s delay to upgrade its nodes slowed down all the DeFi ecosystems, simply because protocols prefer to cloud store their nodes instead of running it themselves.

Conclusion

So, while the Amazon Managed Blockchain integration might be big news for Ethereum, we cannot underestimate the threat it poses to the integrity of the network. We should still ask for service providers to store the nodes they run themselves, like exchanges and other sensitive platforms do.

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