Ethereum's Proof-of-Stake structure faces challenge as the withdrawal queue achieves an all-time high of $12 billion: Let's delve in
The Ethereum network has recently witnessed a significant reshuffle in its validator queues, with a notable development being the surge in the exit queue. Currently, the Ethereum exit queue is valued at an impressive $12.3 billion, surpassing the entry queue's value of approximately $3 billion. This imbalance is causing a decrease in Total Value Staked (TVS) in the Ethereum PoS network. One of the key contributors to this surge is Kiln, a professional ETH staking provider, which withdrew 1.6 million ETH from the Ethereum PoS network this week. This withdrawal accounts for approximately 61% of the current exit queue. It's worth noting that Kiln's decision to withdraw was likely influenced by the SwissBorg hack. The exit queue's current size is not just a sign of a sell-off, but rather a strategic repositioning. Around 40% of Ethereum's current exit queue is moving into a strong DeFi push, indicating that stakers are seeking higher yields. The spike in the Ethereum exit queue reflects the rotation of capital into higher-yield DeFi opportunities. This shift is partly due to the staking Annual Percentage Rate (APR) falling to 2.84%, a record low. The Ethereum PoS network experienced its largest weekly drawdown in TVS, with nearly 150k ETH leaving staking, bringing TVS to 36 million. However, it's important to note that many withdrawn ETH are expected to be restaked, reflecting ongoing confidence in staking despite withdrawal queue delays and a complex capital flow dynamic between staking and DeFi sectors. The recent events have led to a reshuffle in Ethereum's validator queues, with DeFi protocols like Pendle on Ethereum offering higher returns compared to staking. For instance, stETH pools on DeFi platforms offer around 5.4% APR. The Ethereum exit queue has surged to 2.63 million ETH, representing a 327% increase in one week and a 45-day wait. According to Validatorqueue, several factors are driving this shift in Ethereum's PoS network. Despite the current trend, it's important to remember that Ethereum's Total Value Staked (TVS) hit a record high in early August at 3.26 million ETH. This highlights the ongoing interest and confidence in the Ethereum network. In conclusion, the Ethereum network is experiencing a significant shift, with a surge in the exit queue and a decrease in TVS. However, the ongoing confidence in the network is evident, as many withdrawn ETH are expected to be restaked and TVL in DeFi has reached a four-year high of $97 billion.
