Ethereum Validator Exit Queue Swells to 433,158 ETH as DeFi Hack Fallout Fuels Restaking Outflows

A surge in Ethereum validator withdrawal requests is adding to signs that fallout from recent DeFi hacks is accelerating outflows from restaking products.

BeInCrypto reported on May 3 that Ethereum’s validator exit queue had risen to about 433,158 ETH. The withdrawal wait time extended to about seven days. The amount in the queue has jumped roughly 72,000% over the past two weeks.

The move has coincided with a recent string of major DeFi hacks. Outflows have accelerated especially from restaking asset rsETH after KelpDAO’s roughly $292 million bridge hack in April. LayerZero had previously identified the Lazarus Group, a North Korea-linked hacking organization, as being behind the attack.

Anxiety across the broader DeFi market has also deepened. Total cryptocurrency losses from hacks in April reached $625 million, the highest level on record. Liquid restaking tokens, bridges and lending protocols were hit particularly hard. Total value locked across DeFi has also fallen about 30% over the past 12 weeks.

“Capital is leaving DeFi broadly,” on-chain analyst Checkmatey said. In the current structure, the market appears to be judging expected returns as too low relative to the risk of principal loss.

Still, some market participants do not view the trend as a simple retreat from staking. The queue for new staking deposits stands at about 3.6 million ETH, roughly seven times the size of the withdrawal queue. Total staked Ether also remains at about 38.6 million ETH, or 31.7% of total supply.