Ethereum RPC as a Service

Oct 28, 2022

Google Cloud announced Blockchain Node Engine, a hosted RPC node for Ethereum. RPC is the primary way that you query data on the blockchain. AWS offers a similar product, AWS Managed Blockchain. Essentially these are just fully synced Ethereum nodes running Geth, the Go Ethereum client, and de facto implementation of the spec.

It’s an easy decision for cloud hyperscalers — these services send lots of data over the network and need large machines with provisioned IOPS. Although not without technical debt, Geth is one of the best-written infrastructure pieces in web3 (I’ve seen a lot of Go). And Ethereum backups can be shared to bootstrap the syncing process (something that official authors don’t offer because it’s against the ethos of web3). So (1) driving underlying infra spend and (2) amortized syncing speed ups.

Not to mention enterprise RPC providers are one of the more profitable and real web3 businesses. There’s Alchemy ($10.2B valuation, Feb ‘22) and ConsenSys ($7B valuation, Mar ‘22), and Quicknode. The numbers might be inflated from the last cycle, but these companies have actual revenue. Maybe the markets aren’t growing as prominent anymore, but it’s a key infrastructure piece that isn’t going anywhere.

The existential threat is that these platforms must extend their offerings before competitors enter the space. The Ethereum RPC is quite limited — you can’t query an account and get a list of transactions or a list of NFTs that an account owns. There’s little software differentiation at this point — everyone is running Geth. Once you index all the data in a standard SQL database, you can provide higher-level APIs (like Alchemy has done).

The best-positioned players, here again, are the cloud hyperscalers — they just need to sell the compute, storage, and networking. However, while I don’t think AWS is a dumb pipe, I’m skeptical of their ability to deliver here because the developer experience is currently so terrible (vs. traditional development). Not to mention the reputational risk to their old-school enterprise customers.

Of course, maybe the best version of this business looks more like an API business where you are the sole infrastructure provider offering access to your network.