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I am setting up load balancing for my Amazon RDS Read Replicas using HAProxy, should I use a m1.large or c1.medium instance type for running HAProxy ?

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You might want to look into Elasticache.

If you are determined to use HAProxy then I'd select the instance with a higher memory level when load balancing read replicas.

Are you going to run a cluster of HAProxy so that this is not a single point of failure?

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