Ethereum Validator Queue Surge: What's Behind the Exodus?
Ethereum Validator Exit Queue Set to Surge: Understanding the Trend
The Ethereum validator exit queue is poised for a notable increase in the coming days. However, according to Ethereum educator Anthony Sassano, this isn't necessarily a cause for alarm within the crypto market.
Sassano addressed concerns in an X post, stating that the exiting ETH will likely be restaked with new validator keys, mitigating potential sell pressure. This follows an announcement from Kiln Finance regarding precautionary measures taken after a hack affecting SwissBorg, a Switzerland-based crypto wealth management platform.
While a large outflow of staked Ether (ETH) is often viewed as a bearish indicator, current data suggests a different narrative. The ETH exit queue currently sits at 1,628,074, according to ValidatorQueue data. Approximately 35.5 million ETH is staked, representing roughly 29.36% of the total supply.
Kiln Initiates “Orderly Exit” of Ethereum Validators
Kiln Finance announced its strategic decision to exit all of its Ethereum validators as a preventative measure. This action aims to protect client assets across all networks following the Solana incident impacting SwissBorg.
“Following our announcement yesterday regarding the Solana incident involving SwissBorg, Kiln is taking additional precautionary measures to safeguard client assets across all the networks,” Kiln Finance said in an X post.
SwissBorg reported that hackers exploited an API vulnerability within Kiln, its staking partner. This led to the theft of approximately 193,000 Solana (SOL) tokens from its Earn program.
“As part of this response, Kiln today began the orderly exit of all of its Ethereum validators. The exit process is a precautionary measure designed to ensure the integrity of the staked assets,” Kiln Finance explained.
Timeline and Market Impact
Kiln Finance estimates that the validator exit process could take between 10 and 42 days, varying based on the specific validator.
Ether is trading at $4,306 at the time of publication, according to CoinMarketCap.
Notably, Ethereum has recently experienced fluctuating entry and exit queue volumes.
In late August, Ethereum saw a significant validator exodus, with over 1 million Ether tokens queued for withdrawal from the proof-of-stake (PoS) network.
Conversely, early September saw a surge in Ether being queued for staking, reaching its highest level since 2023, fueled by institutional interest and crypto treasury allocations.
For developers and projects seeking to bolster their blockchain security during these dynamic times, Codeum offers comprehensive smart contract audit services to identify and mitigate potential vulnerabilities.