Cysic founder Leo Fan raised concerns about blockchain projects relying heavily on hyperscalers like Google Cloud and Microsoft’s Azure, stating that it could compromise the decentralization ethos of crypto, during Consensus Hong Kong 2026.
Following Cardano founder Charles Hoskinson’s introduction of Midnight, Cardano’s privacy-focused project, and its partnerships with companies like Google and Telegram, Fan expressed his reservations. Midnight is set to launch its mainnet by the end of March, as per Hoskinson.
While defending the collaboration with hyperscalers, Hoskinson argued that no single layer-1 blockchain could handle the computational demands necessary for global, privacy-preserving systems.
“When companies invest a trillion dollars in building data centers,” he mentioned, referring to major cloud providers, “it would be wise to leverage their infrastructure rather than attempting to create a separate network.”
Fahmi Syed, CEO of Midnight Foundation, disclosed that the network would start with 10 federated nodes as part of a gradual decentralization process. Google Cloud is among the early collaborators providing infrastructure support.
Validating the single point of failure
Hoskinson explained that Midnight is designed to delegate intensive computational tasks, particularly related to privacy and zero-knowledge cryptography, to cloud providers like Google Cloud and Microsoft Azure. He highlighted that technologies such as multi-party computation and confidential computing would enable providers to offer hardware capacity without accessing the underlying data.
During a live demonstration, Hoskinson revealed that Midnight processed thousands of transactions per second with Microsoft Azure powering the backend compute layer.
However, Fan contended that relying on hyperscalers for core compute could introduce structural centralization risks.
“Even if your validators appear decentralized but are all hosted in the same data center, that still represents a single point of failure,” Fan shared with CoinDesk. “Blockchain aims to eliminate single points of failure. Centralized infrastructure contradicts that principle.”
Cysic specializes in a decentralized compute network focusing on zero-knowledge proof generation. Fan mentioned that a customer reduced proof-generation time from up to 90 minutes on AWS to around 15 minutes using Cysic’s distributed hardware network.
“In certain scenarios, we can achieve better performance,” Fan stated. “We don’t necessarily have to outperform them immediately, but we can compete.”
Defining decentralization
Hoskinson clarified that Midnight doesn’t outsource its blockchain to Google or Microsoft. The base network operates its own nodes, and he emphasized that hyperscalers offer hardware capacity rather than governance or protocol control.
He described Midnight as a neutral coordination layer capable of dynamically routing workloads between cloud providers. He argued that encrypted computation and confidential computing environments ensure that providers only offer hardware support.
While Hoskinson’s focus is on cryptographic neutrality over hardware ownership, Fan’s criticism centers on a different layer of the stack.
Even with encrypted data and the ability to shift workloads between providers, Fan cautioned that dependence on a small number of global infrastructure operators consolidates power at the compute layer, especially with the growing demand for GPUs and data center capacity.
The debate isn’t just about whether Midnight is centralized from a technical standpoint but also about the definition of decentralization.
Hoskinson prioritizes cryptographic neutrality, while Fan believes decentralization should encompass the compute layer itself.
Instead of completely shunning hyperscalers, Fan proposed a hybrid approach.
“Utilize major vendors in a limited capacity,” he suggested. “Combine them with decentralized networks to enhance system resilience. Don’t compromise on decentralization, as it’s fundamental to our community.”
As blockchain networks aim for enterprise adoption and global expansion, the balance between developing parallel infrastructure and integrating with Big Tech may shape the future of crypto.
