ETH Validator Exit Backlog Swells to $3.2B as Unstaking Momentum Accelerates

The unstaking wave intensifies as Ethereum validators rush to exit, with over 699,600 ETH now awaiting withdrawal—a year-high surge that signals growing concerns about leveraged positions and DeFi liquidation risks.

When Price Rallies Meet Mass Exodus

Ethereum’s ascent toward all-time highs has triggered an unexpected consequence: a massive spike in validator withdrawals. As ETH climbed from $3,800 to $4,700, the validator exit queue expanded dramatically, hitting a one-week peak that reflects growing urgency among stakers to lock in gains. More than 217,000 ETH were added to the exit backlog within just 48 hours—the largest two-day surge in months.

The validator queue now holds nearly 700,000 ETH worth $3.2 billion, forcing withdrawals to wait over 12 days to complete. This represents a stark departure from recent months of balanced activity, with unstaking requests now far outpacing new staking deposits for the first time since July.

The Leverage Unwinding Story

The surge isn’t merely about profit-taking. Many validators had originally locked their stakes at much lower price points and are now capitalizing on the rally. However, a more concerning narrative underlies this exodus: the unwinding of leveraged ETH positions built through liquid staking derivatives.

The previous strategy was straightforward and lucrative during bull markets: validators would deposit ETH into liquid staking protocols like Lido or EthFi, receive liquid staking tokens (LSTs) in return, then collateralize those LSTs on Aave or similar DeFi platforms to borrow additional ETH for further staking and reward accumulation. As rates compounded, the strategy multiplied available capital—until market dynamics shifted.

Liquid Staking Under Pressure

The rush to exit liquid staking protocols tells the story clearly. Lido DAO hemorrhaged 281,824 ETH in the past month alone, while Coinbase and EthFi saw significant redemptions. These withdrawals represent DeFi participants aggressively de-risking, concerned that leveraged positions could trigger cascading liquidations if markets turn volatile.

This unwinding poses a systemic risk: large-scale ETH withdrawals exceeding 1 million could destabilize the liquid staking token market itself. LidoDAO and similar protocols face de-peg risks, potentially spreading contagion to downstream DeFi applications like Aave, where billions in collateral depend on LST valuations holding steady.

The Liquidation Cascade Risk

As the validator exit queue grows with Ethereum’s price strength, the paradox becomes clear: a bull market for ETH may trigger a bear market for leveraged stakers. Borrowing rates on overcollateralized LST positions have already climbed to unsustainable levels, and further withdrawals could trigger a liquidation spiral.

Meanwhile, only 100,000 ETH remain in the staking entry queue—a fraction of the 699,600 waiting to exit. This imbalance suggests holders are deliberately keeping capital liquid, unwilling to commit fresh stake while uncertainty clouds the DeFi landscape.

The validator queue’s explosive growth isn’t just a technical metric—it’s a visible warning light that the market is reassessing leverage, collateral risk, and the stability of liquid staking infrastructure during bull-run extremes.