Cloud infrastructure: a commitment for institutional commitment

Institutional capital is finally flooding into the crypto sector. It first came through Bitcoin (BTC) and Ethereum (ETH) ETFs, but the next frontier is staking, where assets don’t just sit around; they earn returns. Institutions demand growth, compliance and security. With crypto now part of their capital base, staking is destined to become a core strategic pillar.

Here’s the problem: most infrastructure still runs on shared cloud services designed for Web 2.0 and consumer apps, not institutional financial systems. Cloud services work great for mobile games, but are woefully inadequate when a single minute of downtime can cost millions.

The risks of cloud-based staking infrastructure

Most of today’s efforts are built on the wrong foundation. The majority of validator nodes (the servers and systems that secure proof-of-stake blockchains and earn rewards) still cluster on the Big Tech consumer cloud providers, such as AWS, Google Cloud, and a handful of others. That’s because they are “easy” to implement and are known to developers.

But my grandfather always said, “The easy way is usually not the right way,” and he was right. There’s an important, not-so-hidden situation for the big tech players. A single policy change, price change, or outage at one of these providers can have a ripple effect across entire networks, taking out a whole slew of validators at once.

And that’s just the centralization problem. Compliance and control are different. Meeting the kinds of standards that institutions care about – choice of jurisdiction, SOC2 for data/information security, and CCSS for crypto operations, while aligning hardware and networking with each protocol – is much more difficult when you don’t have control over the physical infrastructure that runs your business. Cloud platforms are designed to abstract that away, which is great for a weather app but terrible when the auditors come knocking.

That same abstraction also blinds operators to what’s really happening under the hood. Key performance metrics, such as latency, redundancy configurations, and hardware status, are often hidden behind the provider’s curtain, making uptime guarantees little more than educated guesses. And because the cloud infrastructure is shared, you inherit the problems of your noisy neighbors.

Look no further than the history of recent major outages at AWS, including the one in November 2020, December 2021, June 2023and most recently a 15-hour outage in October 2025bringing major banks, airlines and many other businesses to a standstill. In crypto, you don’t just miss out on rewards or take a hit on your returns; you can impose material fines.

Why institutions prefer bare metal infrastructure

Institutions do not trust black boxes to handle their capital, and rightly so. They want to see, touch and control these systems. That’s why, as attention shifts to the institutional domain, bare-metal infrastructure is taking the lead. Running validators on dedicated machines gives operators full control over performance and provides real-time insight. Nothing is hidden behind a provider’s dashboard or locked away in an abstraction layer.

At scale, bare metal is also more cost-effective for deploying workloads than renting segments of the cloud for general use. The economics can be deceptive at first: what starts out as a cheaper way to test an idea on AWS becomes an expensive method to put into production. In a dedicated staking environment, costs per compute and storage unit decrease, operational isolation is guaranteed, and performance improves.

Then there is compliance. Auditors want transparent, documented chains of custody over every asset in your environment. With bare metal you can prove where your servers are located, who has physical access to them, how they are secured and what redundancy measures are in place. The result is an infrastructure that not only complies with the letter of the rules, but also inspires confidence among counterparties.

Bare-metal deployments in high-performance data centers, with physical security and dedicated failover systems, can provide the kind of business assurances that make staking a credible part of a treasury strategy. In the coming wave of due diligence, projects that still rely on shared cloud infrastructure will struggle to raise the bar. Those who combine physical decentralization with operational transparency will be the ones to raise serious capital.

Serious capital requires serious infrastructure

As striking evolves into a real strategy for institutions, the infrastructure behind it will determine who deserves trust and who is left behind. Cloud-based setups may have fueled crypto’s early growth, but they fall well short of the standards that require serious capital. Institutions don’t build games or NFT marketplaces; they manage risk, compliance and capital flows.

That changes the definition of ‘decentralized’. It is not enough to spread nodes across different portfolios and jurisdictions. These nodes must be reliable, transparent and resilient. The projects that recognize this shift now and rush to build institutional-quality infrastructure will be the ones to reap the long-term benefit.