Node Providers
Note: Data in this section last updated September 12th, 2022
What are Node Providers?
A “blockchain” is little more than a collection of computers – called “nodes” – that maintain an identical copy of a shared database. These nodes are responsible for hosting the blockchain, adding transactions and ensuring its security (and are often paid handsomely for this privilege).
Nodes are the only devices that can interact with a blockchain. That means if you want to use one, you must either:
Set up and run your own node
Connect to nodes provided by third-party services such as Alchemy or Infura
Most people lack the time, patience or technical knowledge to host their own node and, as such, the vast majority of users choose to use third-party providers (even as early as 2019, Infura was handling over 12 billion API requests per day).
Most Users Connect to Ethereum Network via a Third-Party Node Provider Such as Infura
Unfortunately, most of these providers are centralized and, as such, are seen by many to be blockchain’s dirty little secret.
For instance, Infura is owned and operated by ConsenSys (the in-house development studio of Ethereum) and hosted on cloud services owned by Amazon. This creates several problems including:
High Costs: Infura’s entrenched position gives it significant negotiating power and allows it to charge prices that are often above market
Frequent Outages: Dependance on Infura represents a single point of failure for Ethereum and has resulted in several outages, including major ones in November 2020 and April 2022
Potential for Censorship: In an attempt to block two separatist regions of the Ukraine in March 2022, Infura accidentally restricted access for users in Venezuela
Even Michael Wuehler, the co-founder of Infura admits that “If every single dapp in the world is pointed to Infura, and we decided to turn that off, then we could, and the dapps would stop working.”
Fortunately, decentralized alternatives such as the Pocket Network are emerging to remove this chokepoint.
How do Decentralized Providers Work?
Founded in 2017 by Michael O’Rourke, the Pocket Network functions as a decentralized “marketplace” for nodes.
Instead of owning the nodes directly like Infura or Alchemy, the network simply connects users (Web3 applications that need to connect to public blockchains such as Ethereum, Solana or Polygon) with independent node providers (known as “Service Nodes” on the platform).
The Pocket Network is a Marketplace for Decentralized Nodes
Pocket Network’s marketplace is driven by the platform’s native token, POKT. To use the service, both customers and Service Nodes must stake POKT as collateral. Once deposited:
Users can make a request to the Pocket Network to connect to a blockchain
Requests are routed through Pocket’s software, which connects users to a random Service Node. These nodes are rotated out every hour, and the network immediately replaces any node that crashes or goes offline
Service Nodes connect users to the blockchain of their choice and relay the appropriate data
Another set of nodes, known as Validator Nodes, verify the legitimacy of the work performed by the Service Nodes
If the transaction is legitimate, it is finalized, if not, the Service Node is heavily penalized and its collateral stake is slashed
Upon completion of the transaction, Pocket debits the payment from the user’s staked collateral and sends 89% to the Service Node, 1% to the Validator Node and keeps 10% for itself (via it’s user-owned PocketDAO).
Using Pocket offers several benefits to Web3 applications. In addition to being decentralized, it is often up to 10x cheaper than traditional providers, highly resistant to outages and it offers multichain support to over 50 networks including Ethereum, Solana, Polygon, BSC, Avalanche and NEAR.
As a result, the network has grown considerably over the last few years – it currently hosts nearly 50K nodes over 30 countries and performs over 6 billion relays per week.
Key Players
While not an exhaustive list, key players in the node provider market include:
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