RPC decentralization is a myth for most networks. While node software is open-source, the physical infrastructure—servers, data centers, bandwidth—is controlled by a handful of centralized providers like AWS, Google Cloud, and Cloudflare.
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Why 'Decentralized' RPC Networks Are Often Centralized in Practice
An analysis of the hidden centralization vectors in networks like Pocket Network, focusing on gateway layers, client software monoculture, and token concentration.
introduction
THE ARCHITECTURAL LIE
Introduction
The promise of decentralized RPC access is undermined by centralized infrastructure dependencies at the physical and economic layers.
Economic incentives create centralization. Running a globally performant RPC node requires capital and expertise, leading to consolidation. Services like Infura, Alchemy, and QuickNode dominate because they offer the reliability and scale that individual operators cannot.
The client diversity problem exacerbates this. Over 85% of Ethereum validators run Geth, creating a systemic risk. If a bug emerges in this dominant client, the network halts, proving that software monoculture negates theoretical decentralization.
Evidence: A 2023 study by Chainspect showed that over 60% of Ethereum's RPC traffic routes through just three infrastructure providers, creating clear single points of failure for the 'decentralized' web.
thesis-statement
THE ILLUSION
The Core Argument
Decentralized RPC networks often rely on centralized infrastructure, creating a critical single point of failure.
Provider Centralization is Inevitable: Most 'decentralized' RPC networks like Infura, Alchemy, and QuickNode aggregate traffic to a handful of centralized cloud providers. The network's resilience depends on AWS, Google Cloud, and Azure, not a distributed node set.
The Load Balancer Bottleneck: User requests route through a centralized gateway before distribution. This entry point, managed by the network operator, becomes a censorship vector and performance chokepoint, negating peer-to-peer ideals.
Evidence from Ethereum: Over 70% of Ethereum's RPC traffic flows through Infura and Alchemy. Their respective outages have historically paralyzed major dApps and wallets, demonstrating infrastructure fragility despite decentralized branding.
key-trends
THE INFRASTRUCTURE TRAP
The Three Centralization Vectors
Decentralized applications are often built on RPC infrastructure that silently re-introduces single points of failure, censorship, and data control.
01
The Load Balancer Bottleneck
Most 'decentralized' RPC networks rely on a centralized load balancer or gateway to distribute requests. This creates a single point of failure and censorship.\n- Critical Control Point: The gateway sees all user traffic and can filter or block requests.\n- Latency Dependency: All requests are funneled through a single cluster, creating a performance bottleneck and negating geographic distribution benefits.
1
Choke Point
100%
Traffic Visible
02
The Provider Oligopoly
Node infrastructure is often concentrated with a handful of centralized cloud providers like AWS and Google Cloud. Geographic and provider diversity is a myth.\n- AWS Dominance: A significant majority of Ethereum nodes run on AWS us-east-1, creating systemic risk.\n- Correlated Failure: An outage at a major cloud provider can cripple the 'decentralized' network, as seen in past incidents with Infura and Alchemy.
>60%
On AWS
1 Region
Primary Risk
03
The Governance Token Illusion
Token-based networks like The Graph or Pocket Network often have voting power and protocol upgrades controlled by a small group of whales or the founding team.\n- Voter Apathy: Low token-holder participation allows core teams to pass proposals with minimal decentralized input.\n- Client Monoculture: The network depends on a single client implementation (e.g., Geth for Ethereum), which the core team controls, creating a centralization vector in software.
<5%
Voter Turnout
1
Client Stack
deep-dive
THE ILLUSION OF DECENTRALIZATION
Architectural Analysis: The Gateway Bottleneck
The RPC layer's infrastructure and governance expose a critical centralization point, undermining the decentralized applications it serves.
RPC providers centralize infrastructure. Public endpoints from Infura, Alchemy, and QuickNode dominate traffic, creating single points of failure and censorship. Their globally distributed node networks mask the centralized control of the gateway logic and API.
Load balancers are centralized chokepoints. Even decentralized RPC networks like Pocket Network or Ankr route user requests through a centralized load balancer. This component decides which node serves the request, creating a critical trust assumption.
Governance is a permissioned bottleneck. The whitelisting of node operators and the management of service-level agreements are controlled by a core team or foundation. This mirrors the permissioned validator set issues seen in early Proof-of-Stake chains.
Evidence: Over 80% of Ethereum's application traffic flows through Infura and Alchemy. A 2020 Infura outage paralyzed MetaMask and major DeFi protocols, demonstrating systemic risk.
RPC INFRASTRUCTURE
Centralization Risk Matrix: Pocket Network vs. The Ideal
A quantitative breakdown of where leading 'decentralized' RPC providers like Pocket Network still exhibit centralization vectors compared to a theoretical ideal.
| Centralization Vector | Pocket Network (Current) | Theoretical Ideal | Traditional Centralized (e.g., Infura/Alchemy) |
|---|---|---|---|
Node Client Diversity | Geth (95%), Erigon (5%) | Geth < 33%, Nethermind < 33%, Erigon < 33%, Besu < 33% | Geth (100%) |
Validator/Relayer Node Count | ~15,000 (Active) |
| ~100 (Managed Clusters) |
Client Software Governance | POKT DAO (Token-Gated) | Multi-Client Developer DAOs (e.g., EF, Polygon Labs) | Corporate Roadmap |
Geographic Censorship Resistance | ~40 Countries |
| < 10 Regions (AWS/GCP Zones) |
RPC Endpoint Access | Token-Staked Gateways (Semi-Permissioned) | Direct P2P (Fully Permissionless) | API Key & Rate Limits |
Service-Level Centralization (SLAs) | DAO-Governed Protocol (No SLA) | Cryptoeconomic Guarantees (Bond Slashing) | Corporate Contract (99.9% Uptime SLA) |
Data Availability Layer | Relies on Underlying Chain | Integrates EigenDA, Celestia, Avail | Proprietary Cache & Indexers |
counter-argument
THE ARCHITECTURAL REALITY
Steelman: "But The Node Layer Is Decentralized!"
Decentralized RPC networks often centralize at the gateway and load-balancer layer, creating a single point of failure and censorship.
The Gateway is the Chokepoint. A network of thousands of nodes is irrelevant if all traffic funnels through a centralized gateway server. This single entry point controls routing, rate-limiting, and request filtering, replicating the very centralization these networks claim to solve.
Load Balancers Dictate Censorship. Services like POKT Network or Lava Network rely on centralized load balancers to distribute requests. The operator of this component can silently blacklist addresses or censor transactions, a power analogous to Infura or Alchemy.
Economic Incentives Misalign. Node operators are rewarded for uptime, not censorship resistance. A gateway operator facing regulatory pressure has a direct financial incentive to comply, while individual node runners remain powerless and unaware.
Evidence: In 2022, Infura's compliance with OFAC sanctions blocked access to Tornado Cash-related addresses, demonstrating that control over the request gateway is control over the network. Decentralized RPC networks with centralized gateways are architecturally vulnerable to the same action.
risk-analysis
DECENTRALIZATION THEATER
The Bear Case: What Could Go Wrong?
The promise of decentralized RPC networks often collapses under the weight of operational reality, creating systemic risks.
01
The Load Balancer Single Point of Failure
Most 'decentralized' RPC networks front their node fleet with a centralized load balancer. This creates a critical chokepoint for censorship and downtime, negating the core value proposition.
- Gateway Centralization: A single AWS/Azure region routes all traffic, making the network as reliable as that cloud provider.
- Censorship Vector: The central gateway can filter or block requests based on origin, method, or content, mirroring Infura's capability.
- Latency Illusion: While backend nodes are global, all requests first hit the central coordinator, adding a mandatory hop.
1
Critical Chokepoint
~100ms+
Added Latency
02
The Staking Cartel & Node Homogeneity
Token-based staking for node operators often leads to consolidation among a few large entities, replicating the validator centralization problems seen in L1s like Solana or BSC.
- Capital Barriers: High staking requirements favor institutional operators over a globally distributed long-tail.
- Software Monoculture: Operators run near-identical client software and infrastructure (e.g., Geth on AWS), creating correlated failure risks.
- Governance Capture: A small group of large stakers can dictate protocol upgrades and fee structures, as seen in early The Graph indexer struggles.
<20
Entities Control >66%
AWS/GCP
Dominant Hosting
03
The MEV & Data Centralization Feedback Loop
Decentralized RPC networks become attractive targets for MEV searchers and data syndicates, incentivizing centralization of the most valuable traffic.
- Tiered Access: Operators with privileged, low-latency connections to block builders (e.g., via Flashbots) create a two-tiered system.
- Data Extraction: The network's aggregated user request data is a goldmine, encouraging internal consolidation and sale to third parties like Chainalysis or Dune Analytics.
- Protocol Collusion: Large node operators can collude to reorder or delay transactions for profit, undermining the neutrality that decentralization is meant to ensure.
$100M+
Annual MEV Value
1-3
Major Data Buyers
04
The Economic Model That Incentivizes Lying
Pay-per-request models with slashing for downtime create perverse incentives for node operators to hide failures, degrading network reliability.
- Uptime Fraud: Operators have a financial incentive to report false uptime metrics rather than admit faults, making health checks unreliable.
- Quality Skimping: To maximize profit, operators may use under-provisioned hardware, leading to inconsistent performance during peak loads (e.g., NFT mints, airdrops).
- Sybil Attacks: The economic model is often cheaper to game with sybil nodes than to operate legitimately, as observed in early decentralized oracle networks.
>99%
Reported Uptime
-80%
Cost to Game
future-outlook
THE ARCHITECTURE
The Path to Actual Decentralization
Most 'decentralized' RPC networks centralize risk at the load balancer and data source layers.
The Load Balancer is the Single Point of Failure. Decentralized RPC providers like Infura's Decentralized Infrastructure Network (DIN) or Pocket Network advertise node diversity, but user traffic is routed through a centralized gateway. This creates a centralized censorship vector and negates the network's distributed backend.
Data Source Centralization is Inevitable. Even with thousands of nodes, the underlying blockchain data originates from a handful of core clients like Geth or Erigon. A consensus bug in these clients creates systemic failure risk across the entire 'decentralized' network, as seen in past Nethermind and Besu incidents.
Token Incentives Misalign with Reliability. Networks like Pocket Network reward nodes for serving requests, which optimizes for throughput over correctness. Nodes are financially incentivized to run the cheapest, most common client software, further homogenizing the network and increasing correlated failure risk.
Evidence: The Graph's migration to Arbitrum for its L2 solution highlights the infrastructure trilemma between decentralization, cost, and latency. Pure decentralization is too expensive and slow for most applications, forcing pragmatic centralization.
takeaways
DECENTRALIZATION THEATER
TL;DR for CTOs
Most 'decentralized' RPC networks are load balancers in front of centralized infrastructure, creating systemic risk.
01
The Single Point of Failure: The Load Balancer
The network's entry point is a centralized gateway. It routes traffic to backend nodes, but its failure or compromise takes down the entire service.
- Critical Risk: A single AWS region outage can blackhole all user requests.
- Censorship Vector: The gateway operator can filter or block transactions unilaterally.
99.9%
Uptime Promise
1
Critical Chokepoint
02
The Backend Illusion: Node Provider Centralization
Even with many node operators, the underlying infrastructure is concentrated. Most rely on a handful of cloud providers like AWS, GCP, Hetzner.
- Geographic Risk: >60% of nodes often run in 2-3 cloud regions.
- Sovereignty Risk: Providers can terminate service based on jurisdiction, affecting the whole network.
>60%
Cloud Concentration
3
Major Providers
03
The Economic Reality: Staking Isn't Decentralization
Token staking for node permission doesn't solve infrastructure centralization. A few large stakers can control the network's physical footprint.
- Governance Capture: Staking whales can vote for provider-friendly policies.
- Capital Barrier: High staking minimums exclude diverse, independent operators.
$1M+
Typical Stake Min
Oligopoly
Risk Profile
04
The Solution: True P2P Mesh Networks
The fix is architectural: eliminate the central gateway. Networks like Waku and libp2p demonstrate client-to-client direct communication.
- No Gatekeepers: Clients discover and connect to nodes via DHTs or peer exchange.
- Resilience: Node failure only affects its direct peers, not the entire network.
0
Central Coordinators
~200ms
Added Latency
05
The Incentive: Align Staking with Physical Distribution
Penalize geographic and provider concentration in consensus. Reward nodes for running on independent ASNs and in underrepresented regions.
- Sybil-Resistant: Proof-of-location and unique IP verification.
- Network Health: Creates organic, censorship-resistant infrastructure diversity.
+30% APY
Diversity Bonus
50+
Target Countries
06
The Fallback: Client-Side Aggregation
When a pure P2P mesh isn't feasible, push logic to the client. Let wallets like MetaMask or SDKs query multiple RPC endpoints directly and compare results.
- Trust Minimized: Client decides which response is valid via consensus.
- Provider Agnostic: Breaks reliance on any single gateway's uptime or honesty.
3-5
Parallel Queries
-99%
Gateway Dependency
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