Ethereum Faces Validator Bottleneck With 2.5M ETH Awaiting Exit
Ethereum's proof-of-stake system is experiencing a significant test as approximately 2.5 million ETH, valued at $11.25 billion, awaits withdrawal from the validator set.
- The exit queue has reached over 46 days, the longest in Ethereum's staking history.
- This spike began on September 9 when Kiln exited all its validators due to security concerns after incidents like the NPM supply-chain attack and the SwissBorg breach.
- The backlog is not solely due to security issues; some stakers are taking profits following a 160% increase in ETH since April, while others are adjusting portfolio exposures.
- Validator entries are increasing thanks to the SEC's statement that staking is not a security and potential ETH ETF approvals.
- Ethereum’s churn limit restricts how many validators can enter or exit per epoch, maintaining network stability.
Currently, stakers face a 44-day wait before reaching the cooldown step. If 75% of exiting ETH is re-deposited, nearly 2 million ETH could flood into the activation queue, causing further delays.
The situation underscores Ethereum's operational dynamics and the centrality of staking within its ecosystem, reflecting the maturation of the network amid infrastructure challenges and regulatory developments.