Solana nearly came to a halt: a provider outage took almost 29% of staking offline.
On August 12, the Solana network came dangerously close to a critical failure. Due to routing issues at the infrastructure operator TeraSwitch, validators controlling 28.83% of all staked SOL simultaneously lost connectivity. This is only 4.5 percentage points below the 33.34% threshold, beyond which the blockchain stops finalizing transactions and effectively freezes.
The incident affected approximately 90 validators. TeraSwitch's autonomous system (AS20326) accounts for about 118.9 million SOL, or 27.34% of the network's total stake. At the moment of the failure, 94% of that amount went offline — a rare case where infrastructure concentration nearly led to the collapse of the entire ecosystem.
The critical level was ultimately not reached. 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 — a small sum, but the signal itself is alarming.
Concentration of risks: a hidden threat to the network
This case is a vivid illustration of a long-standing problem for Solana: excessive dependence on a limited number of hosting providers. According to estimates, even before the incident, TeraSwitch served validators holding 27.1% of staked tokens (data as of July 22). Next were UAB Cherry Servers (12.7%) and Latitude.sh (11%). This structure makes the network vulnerable to single points of failure.
Notably, some major operators have already recognized the risks. For example, Coinbase disclosed in its first-quarter report that 13 of its validators run through TeraSwitch and 10 through Latitude, but each of them has a backup server in a different location. This is a sensible approach that will likely become an industry standard after today's incident.
It is worth recalling that this is not the first such case in Solana's history. In November 2022, German provider Hetzner shut down servers hosting network nodes, affecting about 40% of validators. The network held up then, but the current incident shows that the margin of safety is narrowing. The number of active validators has also dropped to 800 (a minimum since 2021) compared to a peak of 2,500 in 2023, which intensifies the concentration of risks.
My conclusion: Solana has once again demonstrated resilience, but this case is a warning for the entire industry. Infrastructure decentralization is not just an ideological slogan but a critical factor for network survival. Until operators diversify their hosting, any failure at a single provider will remain a ticking time bomb.