Cysic founder Leo Fan argued that blockchain projects that rely heavily on hyperscalers like Google Cloud and Microsoft’s Azure risk undermining the spirit of decentralization of cryptocurrencies, at Consensus Hong Kong 2026.
Fan’s comments came after Cardano founder Charles Hoskinson described Midnight, Cardano’s privacy-focused project, and announced partnerships with companies like Google and Telegram. Midnight is scheduled to launch its mainnet at the end of March, according to Hoskinson.
Hoskinson defended work with hyperscalers, arguing that no layer 1 blockchain can handle the computational demands required for privacy-preserving global systems.
“When people spend a trillion dollars building data centers,” he said, referring to major cloud providers, “we should probably use what they spent that trillion dollars on instead of trying to build a completely different network.”
Midnight Foundation CEO Fahmi Syed said the network will debut with 10 federated nodes as part of what he described as a “responsible” path toward decentralization. Google Cloud is among the first collaborators providing infrastructure support.
Justifying the single point of failure
Hoskinson said Midnight is designed to offload heavy computational workloads, particularly those related to privacy and zero-knowledge cryptography, to cloud providers such as Google Cloud and Microsoft Azure. He added that technologies such as multi-party computing and confidential computing would allow vendors to supply hardware capacity without accessing the underlying data.
During an on-stage demonstration, Hoskinson said Midnight processed thousands of transactions per second with Microsoft Azure powering the backend compute layer.
Fan, however, argued that relying on hyperscalers for core computing still introduces structural centralization risks.
“If your validators appear decentralized but they are all running in the same data center, it is still a single point of failure,” Fan told CoinDesk. “Blockchain is supposed to eliminate single points of failure. If the infrastructure is centralized, that’s a contradiction.”
Cysic operates a decentralized computing network focused on generating zero-knowledge proofs. He said one customer reduced test generation time from up to 90 minutes on AWS to about 15 minutes using Cysic’s distributed hardware network.
“In some scenarios, we can deliver better performance,” Fan said. “We don’t need to defeat them immediately, but we can compete.”
How decentralization should be defined
Midnight will not outsource its blockchain to Google or Microsoft. The base network runs its own nodes and Hoskinson emphasized that hyperscalers provide hardware capacity rather than protocol governance or control.
He described Midnight as a neutral coordination layer that could dynamically route workloads between cloud providers, arguing that encrypted computing and confidential computing environments ensure that providers “simply provide the hardware.”
Fan’s criticism focuses on a different layer of the stack.
Even if data is encrypted and workloads can shift between providers, reliance on a small number of global infrastructure operators concentrates power at the compute layer, particularly as demand for GPUs and data center capacity intensifies, Fan said.
The disagreement is less about whether Midnight is centralized in a strict technical sense and more about how decentralization should be defined.
Hoskinson’s approach prioritizes cryptographic neutrality over hardware ownership. Fan said that decentralization must extend to the computing layer itself.
Instead of calling for a complete rejection of hyperscalers, Fan advocated for a hybrid approach.
“Use large suppliers to a limited extent,” he said. “Combine them with decentralized networks to make the system more robust. Don’t give up on decentralization because that is the nature of our community.”
As blockchain networks seek enterprise adoption and global scale, the divide between building parallel infrastructure and integrating with big tech may define the next phase of cryptocurrencies.
