Ethereum Validators Stalled Amid Celsius Withdrawals: A Wait Game

• Ethereum Validators Experience Withdrawal Delays
• Surge in Validator Exit Queue
• The Role of Celsius in the Backlog
• Previous Delays in Withdrawal

Ethereum Validators Experience Withdrawal Delays

Ethereum$2,315 -2.42%'s validators are currently experiencing a significant delay in the withdrawal of their staked ether (ETH), a situation believed to be partly influenced by the bankrupt crypto lending service, Celsius. Validators stake ETH to fortify the Ethereum network's security, in return for a consistent interest rate. However, there's a limit on the quantity of validators who can unstake their tokens daily, leading to the current backlog.

Surge in Validator Exit Queue

Blockchain data from validatorqueue.com reveals a stark increase in the number of Ethereum validators seeking to exit, from 26 to over 16,000 within a day. This queue represents approximately $1 billion worth of staked ETH. The backlog, however, implies that holders may have to wait up to 5.6 days to repossess their funds.

The Role of Celsius in the Backlog

The now-defunct Celsius, a crypto lender currently undergoing restructuring post-bankruptcy, seems to have a significant role in the current delay. The company announced on X, formerly known as Twitter, about a forthcoming significant unstaking activity which will release ETH for timely distributions to creditors over the next few days.

Nansen, a blockchain analytics firm, reports that Celsius requested 32% of all the ETH currently pending withdrawal. Additionally, it is reported that 54.7% of the pending ETH is from Figment, a staking service associated with Celsius.

Previous Delays in Withdrawal

This isn't the first time Ethereum validators have faced extended withdrawal times. In the month of April, following the Shapella upgrade to the blockchain which allowed for the first-time withdrawal of staked ETH, validators had to wait up to 17 days to get their staked ETH back. During this period, approximately 28,000 validators were waiting to exit the network at one point.

Following this incident, the number of requests for exiting the blockchain noticeably dropped. By the end of May, the time required for a validator to leave the network had shrunk to less than a day, as per data from the blockchain data dashboard validatorqueue.com.

Edited by Jonathan Stoker