At Consensus Hong Kong 2026, a debate broke out that cuts to the heart of crypto’s identity: should blockchains lean on hyperscalers like Google Cloud and Microsoft Azure to scale privacy-preserving systems, or does doing so betray the movement’s decentralization ideals? The clash came into focus after Cardano founder Charles Hoskinson unveiled Midnight, Cardano’s privacy-first project, and announced collaborations with companies including Google and Telegram. Hoskinson confirmed Midnight’s mainnet launch is planned for the end of March and defended using major cloud providers to handle heavy compute workloads. “When people spend a trillion dollars building data centers, we should probably use what they spent the trillion dollars on instead of trying to build a completely different network,” Hoskinson said, arguing that no single layer-1 blockchain can economically match the hardware capacity of hyperscalers. He added that Midnight is designed to offload compute-heavy tasks—especially privacy-related zero-knowledge workloads—to providers such as Google Cloud and Microsoft Azure, while preserving privacy through techniques like multi-party computation (MPC) and confidential computing. In a stage demo, Hoskinson said Midnight processed thousands of transactions per second with Microsoft Azure powering the backend compute layer. Midnight Foundation CEO Fahmi Syed framed the project’s early move toward decentralization as deliberate: the network will debut with 10 federated nodes and work with cloud partners to provide infrastructure support—while the base chain runs its own nodes and governance remains with the protocol rather than the providers. But Leo Fan, founder of decentralized compute provider Cysic, pushed back hard. Fan warned that outsourcing core compute to a handful of hyperscalers risks reintroducing single points of failure and concentration of power—the very problems blockchain was meant to solve. “If your validators look decentralized but all run on the same data center, that’s still a single point of failure,” he told CoinDesk. Fan’s company operates a distributed compute network focused on accelerating zero-knowledge proof generation. He said Cysic has cut proof-generation times dramatically for one customer—from as much as 90 minutes on AWS to about 15 minutes on Cysic’s network—arguing decentralized hardware can match or surpass hyperscaler performance in some scenarios. “We don’t need to defeat them immediately, but we can compete,” he said. The disagreement is less about Midnight’s technical architecture than about how to define decentralization. Hoskinson emphasizes cryptographic and protocol-level neutrality—using encrypted computation so cloud vendors provide raw hardware without access to underlying data. Fan insists decentralization must extend down to the compute layer itself: encrypted workloads and workload routing don’t eliminate the concentration risk if most compute is supplied by a few global operators, especially as demand for GPUs and data-center capacity grows. Fan advocates a hybrid approach: use large cloud vendors selectively, combined with decentralized compute networks to build resilience and avoid ceding too much infrastructure control. Hoskinson’s path favors pragmatic integration with existing cloud capacity to achieve immediate scale and performance while relying on cryptography and protocol design for security and neutrality. As blockchain projects chase enterprise adoption and global scale, this tension—build parallel decentralized infrastructure or integrate with Big Tech—may shape the next phase of the industry. Midnight’s mainnet rollout and how it balances cloud partnerships with decentralization will be an early test of which approach gains traction. Read more AI-generated news on: undefined/news