It’s no secret that Amazon Web Services (AWS) run a massive part of the Internet (almost one-third of the Internet). So, if any issues happen with the service, its consequences are very severe. Unfortunately, that exactly happened when Amazon Web Services (AWS) faced a seven-hour outage, affecting crypto exchanges.
Yesterday, Amazon Web Services (AWS) faced an outage and went off for nearly half of the day, affecting major crypto exchanges like Coinbase and Binance. More than that, even decentralized exchanges such as dYdX couldn’t process transactions.
Although dYdX is decentralized in nature, its functionary is dependent on AWS.
Many people in the crypto community couldn’t get why decentralized exchanges faced issues. It’s a different story to say that centralized exchanges couldn’t function since they mostly rely on AWS.
But decentralized exchanges have a totally different mechanism which kind of puzzled them. The basic ideology is that since a decentralized network doesn’t have any centralized point and can work based on nodes, it shouldn’t face an outage.
However, we tend to forget that while the decentralized exchange can perform without AWS, the mode of interaction (or front-end) is still working on AWS. Moreover, this is what negates the aspect of a decentralized exchange.
Due to all this outage, the governance token of the dYdX exchange saw a substantial dip, falling 5% below the price. However, it soon recovered after the outage.
As of now, retail traders are claiming losses of up to $200,000 due to multiple outages. Some have started a campaign against Binance seeking damages for this outage.