Cysic founder Leo Fan argued that blockchain projects relying heavily on hyperscalers like Google Cloud and Microsoft’s Azure risk undermining crypto’s decentralization philosophy, during the Hong Kong 2026 Consensus.
Fan’s comments came after Cardano founder Charles Hoskinson introduced Midnight, Cardano’s privacy-focused project, and announced partnerships with companies including Google and Telegram. Midnight is expected to launch its mainnet at the end of March, according to Hoskinson.
Hoskinson has defended working with hyperscalers, arguing that no single layer 1 blockchain can handle the computing requirements required for global privacy-preserving systems.
“When people are spending a trillion dollars to build 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 would start with 10 federated nodes as part of what he described as a “responsible” path to decentralization. Google Cloud is among the first collaborators providing infrastructure support.
Justify the single point of failure
Hoskinson said Midnight is designed to offload heavy computing 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 providers to provide hardware capacity without access to the underlying data.
During an on-stage demonstration, Hoskinson said Midnight processes thousands of transactions per second with Microsoft Azure powering the back-end compute layer.
Fan, however, argued that relying on hyperscalers for core computing still introduces structural risks of centralization.
“If your validators appear decentralized but all run on the same data center, it’s still a single point of failure,” Fan told CoinDesk. “Blockchain is supposed to remove 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 proof generation time from 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 to define decentralization
Midnight does not outsource its blockchain to Google or Microsoft. The core network runs its own nodes, and Hoskinson emphasized that hyperscalers provide hardware capacity rather than governance or protocol control.
He described Midnight as a neutral coordination layer that could dynamically route workloads between cloud providers, saying encrypted computing and confidential computing environments ensure providers “just deliver the hardware.”
Fan’s critique focuses on a different layer of the stack.
Even though data is encrypted and workloads can be transferred from one provider to another, 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 the strict technical sense than about how decentralization should be defined.
Hoskinson’s approach prioritizes cryptographic neutrality over hardware ownership. Fan said decentralization must extend to the IT layer itself.
Rather than calling for a complete rejection of hyperscalers, Fan advocated a hybrid approach.
“Use large suppliers in a limited way,” he said. “Combine them with decentralized networks to make the system more robust. Don’t abandon decentralization because that is the nature of our community.”
As blockchain networks continue their enterprise adoption and global scale, the gap between building parallel infrastructure and integrating with Big Tech could define the next phase of crypto.
