A Cloudflare outage on Tuesday knocked out numerous popular web services, including major crypto exchanges FTX, Bitfinex and OKX, raising questions about the security of centralized crypto platforms.
The CEO of OKX, which saw $1.47 billion in trading volume in the past 24 hours, tweeted asking for “web3 alternative in the future” after the company’s website was hit by Cloudflare’s service issues.
FTX, the world’s second-largest crypto exchange, briefly went into the “post-only” trading mode when it became inaccessible during the outage, the firm tweeted. The mode ensures an order to be placed only if it’s an order by a “maker,” which is someone who sets a price to buy or sell.
Block explorer Etherscan and crypto exchange Bitfinex also tweeted about their website being unavailable. Many services affected by the Cloudflare incident were back online within two hours.
The scale of losses caused by the outage is still unclear but advocates of decentralization have long warned of the risk of keeping one’s funds on centralized crypto exchanges, which act as escrows for customers and tout their more user-friendly features. They are more akin to traditional banks or asset exchanges, which are regulated in the jurisdictions they are permitted to operate.
While centralized exchanges are held accountable by regulators, some argue that they are more susceptible to hacks because they are responsible for large volumes of trades and store most of them on their own servers. On the other hand, users who conduct peer-to-peer transactions automated by smart contracts are supposed to be at reduced security risks because even when the decentralized exchange is hacked, the funds are in users’ self-custodian wallets rather than with the platform.