A major Ethereum node provider suffered temporary outages on Nov 11, showing that its over-reliance on a single provider is detrimental to the ecosystem. The situation also demonstrated that the potential fallout for decentralized finance systems could have been even greater.
As reported by BeInCrypto, Ethereum infrastructure provider Infura suffered a significant service outage which resulted in several major exchanges temporarily suspending ERC-20 transactions.
SponsoredInfura is a firm that runs Ethereum nodes on behalf of clients. The problem stemmed from running an older version of the Geth Ethereum client which contained a known and previously fixed bug.
As a result, blockchain explorers were displaying differing information and those discrepancies caused issues elsewhere, including the realms of DeFi. Blockchain researcher Larry Cermak noted that it took over five hours for services to come back online.
A postmortem of the incident was posted by Infura which claimed that it stopped instantly upgrading to the latest versions to prevent instability.
It was important to us to share the details of today’s service outage as quickly as possible. Our team has completed their post-mortem and you can read it here 👇https://t.co/eifVwjwOXk
— Infura (@infura_io) November 11, 2020
Detriment to DeFi
In her latest Defiant newsletter, industry expert Camila Russo explained why this was such a problem for the emerging ecosystem.
Infura has some prominent customers in the world of DeFi including Uniswap, Compound Finance, MetaMask, and MakerDAO. While no tokens were lost and there were no security breaches, the outage showed the dangers in relying on using a single provider.
SponsoredRusso concluded that this was another incident that should battle harden DeFi even further;
“Hopefully this will help make DeFi stronger: More applications should run their own nodes and/or use Infura backups.”
Blockchain engineer David Mihal posted a list of alternative Ethereum node providers.
Market Reaction
Ethereum and DeFi markets barely skipped a breath though, as the total value locked in the latter surged to a new all-time high today to reach $13.5 billion according to DeFi Pulse.
Over $2.5 billion has been poured into DeFi protocols in November. Uniswap is still leading the pack at over $3 billion locked, controlling a 22.3% slice of the market.
Today’s top mover in terms of collateral lockup is Harvest Finance which has seen a surge of 87% over the past 24 hours as TVL approaches $900 million. Harvest is the current favorite due to its high yields though that could change at any time as fickle farmers have a tendency to jump ship quickly.
Midnight