The waitlist for staking claims has reached a new record high amid growing withdrawal pressure from Ethereum validators.
The number of days that stakers need to wait continues to grow as validators increasingly opt to unstake their assets on the Ethereum network. The wait time for the exit queue now stands at 13 days, 16 hours, a record period for validators.
Meanwhile, this comes as the unstaking trend swings northwards. At the time of writing, 788,048 ETH, worth a staggering $3.63 billion, are currently on the exit queue. These growing parameters have sparked claims of network congestion from Whale Wire’s CEO, Jacob King, who mocked “future of finance” claims associated with networks like Ethereum.
Why the Delay for Ethereum Unstakers?
Notably, the wait time for exit validators has outpaced that for entry, with the latter currently standing at 5 days and 18 hours. The delay time for the two first depegged on July 21, with increasing unstaking fueling this unequal wait period.
For the uninitiated, the exit queue is the waiting list for validators seeking to unstake their Ethereum from the network. Typically, this design intends to delay withdrawal briefly to maintain network stability, with just 16 of such transactions processed per block. However, the current waiting time is off the charts compared to the normal period.
Meanwhile, DeFi analyst Ignas has provided some reasons for the growing exit queue and wait time. In a recent tweet, he highlighted that the current number of Ethereum in the unstaking list is at an unprecedented level. Furthermore, he noted that they came from the top three liquid staking token (LST) platforms: Lido, EthFi, and Coinbase.
On why the withdrawal spiked, the analyst suggested it came as users unwound leveraged Ethereum. For context, he mentioned that validators used staked ETH (sETH) to borrow from Aave and repeat the process for a higher yield. However, as the borrowing rates spiked, they are now unwinding.
sETH Depeg, Profit-Taking, and Upcoming Staked Ethereum ETFs
Ignas also tied the high withdrawals to the depegging of sETH and other LSTs. It all started when Tron founder Justin Sun withdrew 600 million of sETH in July, causing sETH to depeg from Ethereum’s price. He noted that validators are cautious of further downsides, hence the withdrawals.
Furthermore, Ignas mentioned that the upcoming Ethereum staked ETFs could be another factor. With the uncertainty that asset managers would use existing infrastructures like Lido for staking services, validators are unstaking in preparation for any circumstance.
Finally, he highlighted that the major catalyst for this is profit-taking amid Ethereum’s price rally. The altcoin king now trades closer to its all-time high than ever following recent bullish form rediscovery, and holders are beginning to take profit.
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