Allnodes Responds to Terra Classic Concerns, Launches Non-Custodial Node Management

Concerns remain that the latest feature does not address the plight of existing customers.

Allnodes has announced a non-custodial node management service directly available for all Cosmos chains.

According to the node hosting provider, this latest update will allow customers to control their node information completely. Furthermore, it asserts that it will only host Tendermint validators using the new system. The latest development announced in a short thread yesterday comes on the back of controversy surrounding the hosting service’s operations, especially within the Terra Classic community.

We are pleased to announce that non-custodial node management is now available directly in our UI for Cosmos-based networks, with support for @Ledger, @keplrwallet, @IBCwallet and Terra Station browser extensions. pic.twitter.com/eVwPTeb822

— Allnodes (@Allnodes) January 27, 2023

According to prominent Cosmos developer Jacob Gadikian who has actively championed the concern, Allnodes, aside from having an extremely high voting power on the Terra Classic chain, also holds the seed phrases of its customers. Consequently, it potentially compromises the several validators using its service.

While many have touted its latest move as a step in the right direction, it is worth noting that it still does not address the concerns of existing customers who have their keys potentially compromised. Classy, a community influencer and network validator, has assured delegates that Allnodes has deleted its seed phrases. However, several users have asserted that it is difficult to prove from a security point of view, and it is safest to assume that copies could exist.

Notably, Allnodes having custody of the seed phrases of several validators poses a centralization risk in the event of an exploit.

Members of the community have proposed that validators shut down current nodes and start new ones. In addition, PFC Validator has also suggested that the node hosting service provider can hire a Cosmos developer to work on “key rotation.” Gadikian has touted this as a lasting solution. In the interim, Gadikian continues to call on the community to redelegate their tokens regardless of the damage to Allnodes, who he says lied to customers.

At press time, Smart Stake Analytics data shows Allnodes’ voting power percentage sits at 17.82%. It has lost 106 unique validators in the last 24 hours. As highlighted in a previous report, the validator plans to gradually increase its commission to 10% in February to encourage users to delegate elsewhere and reduce its voting power.