Ethereum validator exit queue hits all-time high… Impact from Aave liquidity shock

The validator exit queue on the Ethereum (ETH) network has surged to its largest scale ever.

On the 29th, the crypto-focused media outlet The Block reported, "As of the 26th, the Ethereum validator exit queue reached 744,000, marking a historic high." This is a sharp increase compared to just two weeks ago, when the daily average was below 1,000.

The main cause behind the spike in withdrawal queues is attributed to a 'surge in lending rates' on Aave. Recently, a massive 167,000 ETH (worth about ₩630 billion) was withdrawn from Aave, causing the lending rate for wETH to soar from around 3% annually to double digits.

As a result, leverage strategies using assets like stETH shifted from profit to loss territory, and large holders and Vaults repaid loans and utilized validator withdrawals to secure original ETH. In this process, stETH traded at 0.3~0.6% below its benchmark price, and arbitragers seeking this spread also crowded into the exit queue, intensifying the bottleneck.

Another factor is the reopening of deposit limits previously capped by EigenLayer, leading to an influx of capital. Participants who had served as validators with Lido and others sought new opportunities and headed for the exit; in fact, on just the 21st, around $940 million flowed into EigenLayer.

The outlet stated, "This latest surge in the exit queue appears to be a temporary phenomenon," predicting, "If Aave's rate stabilizes, the stETH price will recover and queue congestion should gradually be resolved."