AWS ETH node market share grows 6% French regulator calls for DeFi centralization

ACPR publishes DeFi consultation results, implying smart contract certification and governance rules.

French banking and insurance regulator Autorité de control prudentiel et de résolution (ACPR) has published a summary of the results of a public consultation on regulating decentralized finance (DeFi).

The consultation, which received strong participation from global DeFi stakeholders, provided valuable insights into potential regulatory approaches in Europe.

ACPR said the two-month consultation provided a deeper understanding of the risks and opportunities of DeFi. While DeFi is often described as "decentralized," regulators believe that "disintermediation" may be more accurate given the concentration of infrastructure at major cloud providers, which represents a potential operational vulnerability.

The consultation also showed broad support for DeFi Protocol core smart contract certification and made recommendations on proportions and event reporting. There is also broad consensus on regulatory intermediaries and user interfaces.

Most participants advocate continuing to deploy public blockchains while enhancing resilience. These feedback will help shape ACPR's contribution to European regulatory discussions following the Crypto-Asset Market (MiCA) legislation, focusing on the following issues:

Rules governing blockchain reliability are critical to DeFi.

Smart contract authentication framework.

· Governance and behavioral standards for DeFi platforms.

According to ACPR, regulation of infrastructure, smart contracts, and businesses will allow DeFi to grow while protecting consumers. Native and existing cryptocurrency financial institutions submitted feedback alongside auditors and advisors, providing different perspectives.

While MiCA provides the foundation, regulators believe that further rules are needed given the unique nature of DeFi and tokenized finance. Through the consultations, specific proposals for expanding the scope of supervision were formulated.

**DeFi centralization remains. **

The data shows that ACPR believes that DeFi has hardware centralization problems, and some within the cryptocurrency community share this view. In July 2022, CryptoSlate reported that Amazon AWS facilitated about 32% of Ethereum nodes at the time, with 47% of them running through major U.S. internet and cloud providers. Analysts at the time believed that the network's reliance on companies like AWS could still lead to coordinated attacks across providers that disrupted operations.

July 2022 ETH node distribution, according to ethernodes.org

The chart below shows the distribution of Ethereum nodes by provider in July 2022 and October 12, 2023. Currently, 52.3% of nodes run on managed services, a 5.3% increase.

October 12, 2023 ETH node distribution, from ethernodes.org

According to the latest data, Amazon now accounts for the majority of managed hosting after increasing its market share by about 43.27% to 49.19% in July 2022 over the past 6 months.