From AWS downtime to the $19.3 billion liquidation storm, the "invisible bomb" of encryption infrastructure.

AWS outage paralyzes dozens of crypto platforms, revealing the systemic weakness of crypto infrastructure's dependence on centralized cloud services. This article is based on a piece by YQ, organized, translated, and written by Yuliya and PANews. (Background: Market maker Wintermute reviews the largest liquidation day in crypto history on “1011”) (Background Supplement: Ethereum core developer Péter Szilágyi angrily criticizes: ETH Foundation's compensation is unfair, power is concentrated around Vitalik Buterin…) Amazon Web Services (AWS) experienced a significant outage yesterday (20), severely impacting cryptocurrency infrastructure. Around 4 PM Beijing time, issues in the US-EAST-1 region (Northern Virginia data center) of AWS led to outages of major crypto platforms including Coinbase, Robinhood, Infura, Base, and Solana. AWS has acknowledged an increase in “error rates” in its core database and computing services—Amazon DynamoDB and EC2—on which thousands of companies rely. This real-time outage provides direct and vivid confirmation of the article's core argument: the dependence of crypto infrastructure on centralized cloud service providers creates systemic vulnerabilities that are repeatedly exposed under pressure. This timing is highly cautionary. Just ten days after the $19.3 billion liquidation plummet exposed the infrastructure failures at the exchange level, the AWS outage indicates that the issues have extended from individual platforms to the foundational cloud infrastructure layer. When AWS fails, its chain reaction simultaneously impacts centralized exchanges, decentralized platforms “but still reliant on centralized components,” and countless services attached to them. This is not an isolated incident but a continuation of a long-term pattern. Similar AWS outage events occurred in April 2025, December 2021, and March 2017, each time leading to interruptions in mainstream crypto services. The question is no longer “if” it will happen again, but “when” and “what will trigger it.” The liquidation plummet from October 10 to 11, 2025, serves as a typical case of infrastructure failure mechanisms. At 8:00 PM UTC on October 10 (4:00 AM on October 11 Beijing time), a significant geopolitical announcement triggered widespread selling in the market. Within just one hour, the scale of liquidation reached $6 billion. When the Asian market opened, the total evaporation of leveraged positions had reached $19.3 billion, affecting 1.6 million trader accounts. Key turning points included API rate limiting, market maker exits, and a dramatic drop in order book liquidity. 8:00-9:00 PM: Initial impact—$6 billion liquidation (red zone) 9:00-10:00 PM: Peak liquidation—$4.2 billion, API starts to limit flow 10:00 PM-4:00 AM: Continuous deterioration—$9.1 billion, market depth extremely thin. The scale of this event surpassed any previous crypto market event by at least one order of magnitude. A vertical comparison shows this event's leap characteristics: March 2020 (during the pandemic): $1.2 billion May 2021 (market crash): $1.6 billion November 2022 (FTX collapse): $1.6 billion October 2025: $19.3 billion, 16 times the previous record. However, the liquidation data is merely the surface. The more critical issue lies at the mechanism level: why can external market events trigger such specific failure modes? The answer reveals systemic weaknesses in the architecture of centralized exchanges and the design of blockchain protocols. Off-chain failures: the structural problems of centralized exchanges. Infrastructure overload and rate limiting. Exchanges' APIs typically implement rate limiting mechanisms to prevent abuse and maintain server load stability. Under normal circumstances, these restrictions can prevent attacks and ensure smooth trading. However, during extreme fluctuations, when thousands of traders simultaneously attempt to adjust their positions, this mechanism becomes a bottleneck. During this liquidation, centralized exchanges (CEX) limited liquidation notifications to one per second, while the system actually needed to process thousands of orders. As a result, information transparency plummeted, and users could not grasp the severity of the chain liquidation in real time. Third-party monitoring tools showed hundreds of liquidations per minute, while official data was much lower. API rate limiting prevented traders from adjusting positions during the most critical first hour. Connection requests timed out, order placements failed, stop-loss orders were not executed, and position data was delayed—these all turned market events into operational crises. Traditional exchanges typically allocate resources for “normal load + safety redundancy,” but the gap between normal load and extreme load is vast. Daily trading volumes are insufficient to predict demand spikes under extreme pressure. During chain liquidations, trading volume can surge by 100 times, and position query volumes can even soar by 1000 times. Each user checking their accounts nearly paralyzes the system. Cloud infrastructure's auto-scaling, while helpful, cannot respond instantly. Creating additional database replicas takes minutes, and generating new API gateway instances also takes a few minutes. During this time, the margin system still bases position settlement markings on distorted price data due to order book congestion. Oracle manipulation and pricing vulnerabilities. In the October liquidation event, a key design flaw in the margin system was exposed: some exchanges calculate collateral values based on internal spot prices rather than external oracle prices. Under normal market conditions, arbitrageurs can maintain price consistency across different exchanges, but this linkage mechanism fails when infrastructure is under pressure. Attack paths can be divided into five stages: Initial dumping: $60 million sell pressure applied to USDe. Price manipulation: USDe plummets from $1.00 to $0.65 on a single exchange. Oracle failure: the margin system adopts tampered internal prices. Triggering the chain: collateral is undervalued, leading to forced liquidation. Amplification effect: a total of $19.3 billion liquidation (322 times amplification). This attack exploited the mechanism where Binance uses spot market prices to price wrapped synthetic collateral. When an attacker dumped $60 million worth of USDe into a relatively illiquid order book, the spot price collapsed from $1.00 to $0.65. The margin system configured to mark collateral based on spot prices reduced the value of all positions collateralized by USDe by 35%. This triggered margin calls and forced liquidations of thousands of accounts. These liquidations forced more sell orders into the same illiquid market, further driving down prices. The margin system observed these lower prices and wrote down more positions. This feedback loop amplified the $60 million sell pressure by 322 times, ultimately leading to $19.3 billion in forced liquidations…