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Celsius Unlock Stalls Ethereum’s Road to One Million Validators

Last Updated January 8, 2024 2:22 PM
James Morales
Last Updated January 8, 2024 2:22 PM

Key Takeaways

  • On Friday, January 5, the number of Ethereum validators queuing to withdraw staked ETH surged to a record high of 16,766.
  • Bankrupt crypto lender Celsius was responsible for at least 32% of exiting validators, representing more than 200,000 ETH.
  • The growth of Ethereum’s validator count has slowed as it approached 1 million.

Celsius has staked ETH worth hundreds of millions of dollars, generating yields that have helped offset the cost of restructuring, since it filed for bankruptcy in 2022

Ahead of a planned distribution among creditors, on Friday, January 5,  the company’s move to unlock more than 200,000 ETH caused a surge in the number of Ethereum validators queuing to remove staked tokens.

Wait Time Jumps Amid Record-High Ethereum Validator Exits

On a normal day, there are rarely more than 1,000 Ethereum validators queueing to withdraw their staked ETH. Usually, the entire process takes less than 24 hours. 

However, with a record 16,766 validators queueing  to unstake Ether, on Friday the wait time jumped to nearly 6 days. 

As of Monday 8, Nansen data  reveals that Celsius has over 206,000 ETH awaiting withdrawal, representing nearly 32% of the total exit queue. Moreover, a further 353,000 ETH is currently being removed by the third-party staking service Figment. The platform received around 41,000 ETH from Celsius in June. While it isn’t certain, it seems likely some or all of the assets Celsius staked with Figment are part of the current exit queue. 

Celsius Withdrawals Slow Progress to 1M Validators

Since Ethereum’s Shapella upgrade first enabled the withdrawal of staked Ethereum in April 2023, the number of validators, and consequently the total amount of staked ETH, rose steadily for the next six months. The growth of Ethereum’s validator network started to stall in October. Things have now been set back even further by Celsius’ mass unlocking event.

Ethereum active validator count
Ethereum active validator count.

Post-Shapella, the number of active Ethereum validators increased from around 570,000 to over 850,000. After this, though, the rate at which fresh ETH was being staked started to slow. The next milestone occurred on January 1, when the number of active validators surpassed 900,000. But the journey to a million could prove much more arduous.

At its all-time high on January 4, the total amount of staked ETH peaked at 28.9 million, representing 24% of the total supply. That figure has since fallen by around 300,000, with a further half a million coins still in the withdrawal queue.

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