Solana nearly stopped: provider outage took almost 29% of the stake offline
On August 12, the Solana network came dangerously close to a complete halt in transaction finalization. The cause was a routing failure at the infrastructure provider TeraSwitch, which simultaneously disconnected validators controlling 28.83% of all staked SOL. This is just 4.5 percentage points below the critical threshold of 33.34%, above which the blockchain stops confirming blocks.
The incident affected about 90 validators. TeraSwitch's autonomous system AS20326 served 118.9 million SOL—27.34% of the network's total stake. At the moment of the failure, 94% of that amount went offline simultaneously. Fortunately, a fatal scenario was avoided: routing was restored in about 33 minutes, and the validators came back online. During that time, they missed out on approximately 333 SOL in rewards.
The failure exposed a systemic concentration problem
What happened is a vivid example of how vulnerable Solana's infrastructure is due to excessive reliance on a limited number of hosting providers. Marinade Finance has already stated that it will review its own restrictions on the distribution of validators across autonomous systems, data centers, and backup capacities.
The problem is not new: even before the incident, as of July 22, TeraSwitch served validators with 27.1% of staked tokens. It was followed by UAB Cherry Servers (12.7%) and Latitude.sh (11%). Such concentration creates a risk of cascading failure: a single outage at a key provider could paralyze the entire network.
Some major operators have already recognized the danger. Coinbase, for example, distributes its 23 validators between TeraSwitch and Latitude, and additionally uses a backup server in a different location for each. This is a sensible approach that limits the impact of a single hosting failure.
The historical context is also telling: in November 2022, Hetzner shut down servers with Solana nodes, affecting about 40% of validators with 20% of the stake—the network held up then. But now the situation is more serious: the number of active validators has dropped to 800 (a minimum since 2021) compared to a peak of 2500 in 2023. Fewer validators mean higher concentration of risk.
My comment: This is an alarming signal for the entire Solana ecosystem. The fact that the network was at 86% of the failure point highlights the fragility of the infrastructure. If systemic measures to decentralize validators are not taken in the coming months, the next similar outage could be fatal. Investors should closely monitor the actions of Marinade and other major stakers.