Ethereum’s validators are facing significant delays in withdrawing their staked ether (ETH), and the defunct crypto lender Celsius may be partially responsible for the backlog. Validators stake ETH to help secure the Ethereum network and earn a steady rate of interest. However, there is a limit to the number of validators that can unstake their tokens each day, leading to the current backlog.
According to blockchain data from validatorqueue.com, the exit queue for Ethereum validators surged to over 16,000 on Friday, compared to just 26 the previous day. This backlog represents more than $1 billion worth of staked ETH at current prices. Unfortunately, due to the large number of pending withdrawals, it could take up to 5.6 days for the ETH to be returned to its depositors.
Celsius, the crypto lender that filed for bankruptcy in 2022 and is currently undergoing restructuring, appears to be the main cause of the delays. The company stated on X (formerly Twitter) that “significant unstaking activity in the next few days will unlock ETH to ensure timely distributions to creditors.” According to blockchain analytics firm Nansen, 32% of all ETH waiting to be withdrawn is requested by Celsius, while 54.7% is from Figment, a staking service reportedly used by Celsius.
This is not the first time Ethereum has experienced withdrawal delays. In April, validators had to wait for more than 17 days to retrieve their staked ETH following the blockchain’s Shapella upgrade, which allowed for staked ETH withdrawals for the first time. At one point, there were approximately 28,000 validators in line to leave the network. However, since then, the number of withdrawal requests has significantly decreased. By the end of May, it took less than a day for a validator to exit the network, according to data from validatorqueue.com.
The current situation highlights the challenges faced by validators and the importance of efficient withdrawal processes. As Ethereum continues to grow and attract more validators, it will be crucial to address these bottlenecks to ensure a smooth and timely withdrawal experience for all participants.
Read more: [Article URL]