The Ethereum network is witnessing a surge in validator exits, which hit a record high of over 16,000 validators in the exit queue on Jan. 5, on-chain data showed.
The rise in exits has caused the wait time for unstaking to spike to an average of 5.6 days. Around 15,140 validators are still in the queue as of press time.
The surge was primarily driven by withdrawal requests from defunct CeFi lender Celsius Network and staking provider Figment, which collectively make up roughly 75% of total withdrawals in the queue.
Celsius, which is currently undergoing a restructuring process after declaring bankruptcy last year, has initiated a large-scale withdrawal from Ethereum staking.
The move, aimed at reallocating assets to satisfy creditors’ demands, involves the withdrawal of more than 200,000 ETH, valued at approximately $450 million.
The situation is exacerbated by the involvement of Figment, another major staking provider, which is linked to 54% (350,000 ETH) of the total withdrawals in the queue.
Together, the two entities want to withdraw approximately 550,000 staked Ethereum — roughly 1.7% of the 29 million ETH staked across all platforms.
Entries drying up
Amid these substantial exits, the entry queue for new Ethereum validators remains notably low, hovering near zero. This is a stark contrast to the swelling numbers in the exit queue.
The Ethereum network operates with a churn limit, which restricts the number of validators that can enter or exit the network per day to 2,925, based on 13 validators per epoch.
The surge in exit requests has also impacted the staking yield for Ethereum validators. As of press time, the staking rewards reference rate is about 3.4%, down more than 50% from the nearly 8% yield recorded in May 2023.
This significant shift in validator dynamics poses potential challenges to the Ethereum network’s stability, given the crucial role of validators in securing and processing transactions.
Meanwhile, the extended wait time for unstaking, now at an average of 5.6 days, has raised concerns about the network’s ability to handle large-scale exits.