Cryptocurrencies are, at their core, all about decentralization. That makes it all the more remarkable to see Ethereum in such dire straits today. One of the API providers is offline, creating a very big shockwave in the industry.
Ethereum has a Serious Problem
Contrary to what one may think, there is a lot more centralization in the cryptocurrency space than originally assumed. Infura is a good example of how things can derail at 150 miles per hour. The Ethereum infrastructure provider has a massive service outage. That can happen, and should – in theory – not pose any real problems. In reality, things are very different, and not for the better.
Throughout the day, various service providers have been affected by this Infura issue. Price feeds for ETH and ERC20 tokens have proven to be unreliable. Very unusual, as this is just an infrastructure provider. One also has to wonder why their service has been affected. Surely, there must be more than one Ethereum API for companies to access.
There was a possible ETH chain split at block 11234873. Etherscan and Blockchair are showing two different chains and data after this block. We’re resolving now but have temporarily closed withdrawals. Funds are #SAFU
All of this makes one wonder why so many exchanges and other service providers rely on Infura. Obtaining Ethereum data is very easy and doesn’t require external services. Even so, Binance, Bithumb, and many others were forced to temporarily halt Ethereum withdrawals. MetaMask, the popular in-browser wallet plugin, relies on Infura’s services as well.
Making things worse is the timing of this outage. Ethereum developers introduced new code at block 11,234,873. As a result, all node operators had to upgrade prior to this block being hit. Infura did not, nor did Blockchair. This temporarily led people to believe there was an Ethereum fork, which is not the case.
Professionalism is Hard to Come by
While the code introduced by the developers wasn’t communicated in advance, a lot of things have coincided a bit too conveniently. It is possible someone is targeting Infura to trigger a service disruption and trick ETH holders into panic selling. Especially with exchanges suspending withdrawals, there can be a lot of uncertainty.
Currently, Infura claims all of its services are operational again. All services were restored a little while ago. Even so, it may be a matter of time until something like affects another service provider. Centralization is a death knell for any cryptocurrency projects. As decentralized as Ethereum claims to be, this incident shows that is far from the case.
Keeping all of the above in mind, one has to wonder if this affects the launch of Ethereum 2.0. Having issues like this one so close to that launch is rather worrisome. It makes one wonder how the coming months will progress. That is, assuming the Eth 2.0 upgrade threshold can be achieved. For now, that remains rather unlikely.