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dYdX Defi Exchange Goes Down with Amazon Server Outage, Exposes Vulnerability with Decentralized Claims

dYdX Defi Exchange Goes Down with Amazon Server Outage, Exposes Vulnerability with Decentralized Claims

dYdX

dYdX Defi Exchange Goes Down with Amazon Server Outage, Exposes Vulnerability with Decentralized Claims. Credit: FinkAvenue. istock

The dYdX decentralized exchange (DEX) was down for nine hours on Dec 7 due to a major outage that hit Amazon’s cloud-service network Amazon Web Services (AWS), with some commenters questioning whether a decentralized protocol that relies on services from a centralized corporation is really decentralized.

dYdX is purportedly a “decentralized exchange” on Ethereum for cryptocurrency derivatives that has raised millions from investors including Andreesen Horowitz.

Other large decentralized exchanges by volume are Uniswap and SushiSwap.

The dYdX team admitted that there are still some parts of the exchange that rely on centralized services (AWS in this case), but said one of their top priorities is a commitment to fully decentralize as they continue to iterate on the protocol.

dYdX apologized for the outage and announced that it had been resolved several hours after announcing the exchange was down.

“Due to a major AWS outage, dYdX exchange is currently down,” the company said in a tweet on Tuesday. “We are experiencing greater latency across services and impaired functionality with endpoints not working and the website not loading.”


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It is not entirely clear what part of the exchange’s operations are running on AWS, as the exchange notes that it uses an order book model that matches buy orders and sell orders and is centralized.

Uniswap, which is also a decentralized exchange does not use an order book model and users instead trade with “liquidity pools” at prices that are determined by an algorithm.

dYdX is not the only crypto that uses Amazon’s web infrastructure. 70 percent of Ethereum nodes are deployed on AWS, and Bitcoin nodes can be run on Amazon’s web infrastructure too. There is no indication that either of these networks experienced a meaningful disruption due to the outage.

The outage also caused problems in Amazon’s own warehouses, as reported by mainstream media. Others that were affected are a raft of major websites, streaming providers such as Netflix, Disney+ and Alexa, delivery providers, and government services. Coinbase, which is providing its own cloud services, and Binance also suffered an outage.

Statista estimates that AWS controls around a third of the entire global market for cloud infrastructure services. Too much reliance on one centralized service provider is not a great idea as many have painfully found out.

During the interruption, the exchange’s native token fell to $8.80 but immediately recovered when services were restored.