Introduction to Cloud Service Providers

Cloud service providers offer cloud computing services for their retail and institutional customers. They own data centers with the necessary hardware and software infrastructure for data storage and running of applications, allowing them to provide a suite of services such as platform as a service (PaaS), infrastructure as a service (IaaS), and software as a service (SaaS).

Traditionally, companies rely on on-site hardware and infrastructure to run their own servers, store data, and manage applications. This is much more costly because the hardware takes up physical space and requires maintenance, implying higher operational costs with the manpower and space needed. The COVID-19 pandemic brought about an increased need for remote data access for companies worldwide, catalyzing the growth in cloud usage. The cloud infrastructure industry reached a 12-month revenue of US$217B (as of Q3 2022).

A Catalyst for Institutional DeFi Adoption?

Apart from the boost in growth that came with the pandemic, cloud computing giants such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have also been ramping up their collaborations with blockchain and Web3-native platforms while building blockchain-focused products.

As the entire DeFi ecosystem strives towards mass adoption, institutional DeFi adoption could drive this change in the financial markets. The key to bridging this Web2 to Web3 gap would be providing support for developers who are building infrastructure that accommodates the needs of institutions, thus encouraging the use of Web3 services.

Adapting to the Times, Adopting Blockchain Technology

Just in the last two years, the three largest cloud service providers have taken notable steps to advance in the blockchain space in various ways, such as through collaborations with Web3-native projects. Many of these partnerships allow cloud service providers to give technical and infrastructural support to Web3 platforms, enabling greater scalability and efficiency. For instance, Microsoft Azure’s and AWS’ recent partnerships with Ankr and Ava Labs, respectively, benefit developers in the deployment of nodes. The focus on enabling builders to push the boundaries of DeFi and blockchain adoption through infrastructural development can also be seen with Google Cloud’s support for startups on NEAR Protocol and BNB Chain.

What Does This Mean for Institutional DeFi Adoption?

Many institutions continue to be apprehensive about adopting DeFi, choosing to first observe the space from a distance. There remain many blockers for institutions looking to participate in DeFi as part of their investments, such as scalability, data privacy, data analytics, and regulations. This is despite the efficiencies that DeFi brings, such as automation through smart contracts, interoperability, and composability, which allows for aggregation of liquidity and more capital-efficient investing…