Institutional capital is finally flowing into the crypto sector, with a growing focus on staking as a key strategic pillar. As cryptocurrencies become a part of their capital base, institutions demand growth, compliance, and security. However, most staking infrastructure still runs on shared cloud services designed for Web 2.0 and consumer applications, rather than on institutional financial systems. This poses significant risks, including centralization, outages, opaque performance, and compliance blind spots, which are unacceptable to institutional capital.
The Risks of Cloud-Based Staking Infrastructure
Most validator nodes are clustered with Big Tech consumer cloud providers like AWS, Google Cloud, and others, due to their ease of deployment and familiarity to developers. However, this approach poses significant risks, including centralization, compliance, and control issues. A single policy change, price change, or outage at one of these providers can have far-reaching impacts across entire networks, bringing down entire groups of validators. Moreover, adhering to institutional standards, such as choice of jurisdiction, SOC2 for data/information security, and CCSS for crypto operations, is far more difficult without control over physical infrastructure.
The abstraction of cloud platforms also blinds operators to what is really happening under the hood, making key performance metrics, such as latency, redundancy configurations, and hardware health, hidden behind the scenes. This lack of visibility and control can lead to material penalties and reputational damage. Recent major outages at AWS, including those in November 2020, December 2021, June 2023, and October 2025, have crippled major banks, airlines, and numerous other companies, highlighting the risks of relying on shared cloud infrastructure.
Why Institutions Prefer Bare Metal Infrastructure
Institutions prefer bare metal infrastructure for staking due to its transparency, control, and compliance benefits. By deploying validators on dedicated machines, operators have complete control over performance and provide real-time visibility. Bare metal infrastructure also improves operational isolation, reduces costs, and ensures compliance with institutional standards. Auditors want transparent, documented chains of custody for every component in the environment, which bare metal infrastructure can provide.
Bare metal deployments in high-tier data centers with physical security and dedicated failover systems can provide enterprise-grade guarantees, making staking a credible part of a treasury strategy. As staking becomes a real strategy for institutions, the infrastructure behind it will determine who deserves trust and who gets left behind. Cloud-based setups may have fueled crypto’s early growth, but they fall far short of the standards that serious capital demands.
Serious Capital Requires Serious Infrastructure
As staking becomes a key strategic pillar for institutions, the infrastructure behind it must meet the highest standards of transparency, resilience, and compliance. Institutions manage risk, compliance, and capital flows, and they require infrastructure that can support these functions. The projects that recognize this shift now and strive to build institutional infrastructure will be the ones that take advantage of the long-term upward trend. According to Thomas Chaffee, co-founder of GlobalStake, a carbon-neutral company providing institutional-level staking infrastructure, “Institutions don’t trust black boxes to manage their capital, and rightly so. They want to see, touch, and control these systems.”
As the crypto sector continues to mature, it is essential to prioritize infrastructure that meets the demands of institutional capital. By adopting bare metal infrastructure and prioritizing transparency, control, and compliance, staking can become a credible and attractive strategy for institutions. For more information on the importance of institutional-grade infrastructure for staking, visit https://crypto.news/cloud-infrastructure-liability-institutional-staking/.
Thomas Chaffee is co-founder of GlobalStake, a carbon-neutral company providing institutional-level staking infrastructure. Tom is a serial technology entrepreneur, Silvermine partner, and co-founder of GlobalStake. He was CEO of a public company, moved to two Fortune 500 companies, and served on numerous boards. Most recently, he and his wife co-founded a Title 1 charter school in Sarasota, Florida, serving more than 650 needy families. Tom is an accomplished musician who spent his youth playing with the Beach Boys, Dan Fogelberg, and many other major acts.
