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The technology challenge: Cysic and Cardano face off regarding the development of decentralized computing.
At Consensus Hong Kong 2026, Leo Fan raised concerns about Midnight’s utilization of Google Cloud and Azure, while Charles Hoskinson defends partnerships with hyperscalers.
What to know:
- At Consensus Hong Kong 2026, Cysic founder Leo Fan cautioned that blockchain initiatives that depend significantly on hyperscalers like Google Cloud and Microsoft Azure risk creating single points of failure that compromise the decentralization principle of crypto.
- Charles Hoskinson, the founder of Cardano, defended the decision to partner with major cloud services for the Midnight privacy-oriented network, asserting that global, privacy-preserving systems necessitate hyperscaler-level computing, while cryptography and confidential computing safeguard the data.
- The discussion between Hoskinson and Fan revolves around the definition of decentralization, with Hoskinson favoring cryptographic neutrality over hardware ownership, while Fan advocates for a hybrid model that minimizes dependence on Big Tech and broadens decentralization to the compute layer.
Cysic founder Leo Fan contended that blockchain projects that heavily rely on hyperscalers like Google Cloud and Microsoft Azure jeopardize the decentralization ethos of crypto during Consensus Hong Kong 2026.
Fan’s remarks followed Cardano founder Charles Hoskinson’s presentation of Midnight, a privacy-centric initiative of Cardano, where he announced collaborations with companies such as Google and Telegram. According to Hoskinson, Midnight is set to launch its mainnet at the end of March.
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Hoskinson defended the collaboration with hyperscalers, claiming that no single layer-1 blockchain can meet the computational requirements for global, privacy-preserving systems.
“When companies invest a trillion dollars in building data centers,” he remarked, referring to major cloud service providers, “it makes sense to utilize what they have invested in rather than attempting to create an entirely different network.”
Midnight Foundation CEO Fahmi Syed stated that the network will launch with 10 federated nodes, describing this approach as a “responsible” route towards decentralization. Google Cloud is among the initial partners providing infrastructure support.
Justifying the single point of failure
Hoskinson explained that Midnight is structured to offload intensive computational tasks, especially those associated with privacy and zero-knowledge cryptography, to cloud providers like Google Cloud and Microsoft Azure. He noted that technologies such as multi-party computation and confidential computing enable providers to offer hardware capacity without accessing the data itself.
During a stage demonstration, Hoskinson noted that Midnight handled thousands of transactions per second, with Microsoft Azure providing the backend computing power.
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However, Fan argued that dependence on hyperscalers for essential computing introduces structural centralization threats.
“If your validators appear decentralized but all operate from the same data center, that remains a single point of failure,” Fan remarked to CoinDesk. “Blockchain is designed to eliminate single points of failure. If the infrastructure is centralized, that contradicts the principle.”
Cysic runs a decentralized computing network focused on zero-knowledge proof generation. He mentioned that one client reduced proof-generation time from as much as 90 minutes on AWS to approximately 15 minutes using Cysic’s distributed hardware network.
“In certain situations, we can deliver superior performance,” Fan stated. “We don’t need to immediately overcome them, but we can compete.”
How decentralization should be defined
Midnight is not delegating its blockchain to Google or Microsoft. The fundamental network operates its own nodes, and Hoskinson stressed that hyperscalers supply hardware capacity without governance or control over the protocol.
He characterized Midnight as a neutral coordination layer that can dynamically distribute workloads among cloud providers, asserting that encrypted computation and confidential computing environments ensure providers “simply supply the hardware.”
Fan’s criticism targets a different aspect of the architecture.
Even if data is encrypted and workloads can transition between providers, dependence on a limited number of global infrastructure operators concentrates power at the compute level, especially as the demand for GPUs and data center resources rises, according to Fan.
The disagreement is not merely about whether Midnight is centralized in a strict technical sense but rather how decentralization should be conceptualized.
Hoskinson’s perspective prioritizes cryptographic neutrality over control of hardware. Fan contended that decentralization must extend to the compute layer itself.
Instead of calling for a total rejection of hyperscalers, Fan proposed a hybrid strategy.
“Utilize large vendors in a limited capacity,” he suggested. “Integrate them with decentralized networks to enhance the system’s resilience. Do not forfeit decentralization, as that is fundamental to our community.”
As blockchain networks strive for enterprise adoption and global scalability, the tension between constructing parallel infrastructure and integrating with Big Tech may shape the forthcoming phase of crypto.
