Shockwaves in Market: Celsius Network Unleashes Shockwaves Stretching Ethereum Validator Queue to 51 Days?

Updated: 05 June 2023

Disclosure

Don’t invest unless prepared to lose all the money you invest. This is a high-risk investment, you shouldn’t expect to be protected if something goes wrong.

Join Our Telegram channel to stay up to date on breaking news coverage

With modifications to its ETH staking policy, the cryptocurrency lender Celsius Network has created a stir and extended the already lengthy line to activate new validators on the Ethereum network.

The recent decision made by Celsius Network to deposit ETH into staking contracts is heating the Ethereum staking scene. The Ethereum validator queue now has a record-breaking length of 44 days due to the huge deposit of $745 million worth of ETH into staking contracts during the last two days.

After purchasing almost $813 million in staked ETH from the market leader in liquid staking, Lido Finance, the company has been carefully transferring ETH into staking contracts over a period of two days. According to data from Arkham Intelligence, Celsius has deposited almost $745 million worth of ETH since June 1.

According to Tom Wan, an analyst at cryptocurrency investment product manager 21Shares, the transfers have increased the already lengthy wait time for establishing new validators on the Ethereum network to 44 days, with Celsius perhaps being at blame for over a week of additional time.

“If Celsius decided to stake all the 428k $ETH, it would take 45 days and 4 Hours to clear the whole activation queue. Essentially adding 6 Days & 15 hours to the queue.”

If Celsius decided to stake all the 428k $ETH, it would take 45 days and 4 Hours to clear the whole activation queue. Essentially adding 6 Days & 15 hours to the queue

Thanks @JimmyRagosa for flagging! pic.twitter.com/gbvvu9YSU6

— Tom Wan (@tomwanhh) June 1, 2023

Ethereum’s Shanghai Upgrade

Since Ethereum’s Shanghai upgrade allowed withdrawals from staking contracts in April, Celsius has consequently been moving its staked ETH stockpile around. The transactions moreover are the most recent example of this. At the time, Celsius had 160,000 tokens deployed in its staking pool and 460,000 ETH staked with Lido Finance’s liquid staking platform, which is currently worth $870 million.

Celsius had however filed for United States bankruptcy in July when it succumbed to financial problems brought on by falling cryptocurrency prices and a surge in user withdrawals. The winning bidder Fahrenheit, an investment company supported by Arrington Capital, won the lender’s assets from the bankruptcy court’s auction last week. This includes the firm’s institutional loan portfolio, staked cryptocurrency, and crypto mining units.

Staking Strategies by Celsius

The April Shanghai upgrade to the Ethereum network enabled withdrawals from staking contracts, an outcome that Celsius notably benefited from.

At the time of the upgrade, Celsius had roughly $300 million invested in its staking pool and about $870 million worth of ETH staked with Lido Finance.

Celsius staked $75 million of its available ETH using the non-custodial institutional staking platform Figment. Furthermore, for $813 million, Celsius acquired 428,000 tokens from Lido Finance. The lender split these assets across two separate addresses, which it had previously used for staking with Figment and transferring into its staking pool.

Latest update:

Celsius received 428k $ETH from $stETH withdrawal

– 198k (46%) ETH to their staking pool
– 197k (46%) ETH to an address that was used to stake ETH via @Figment_io
– 32k ETH remain

Pleasure investigating it with @etheraltog
Great tool intro by @TrueWaveBreak pic.twitter.com/KMceKnDi9q

— Tom Wan (@tomwanhh) June 1, 2023

Staking enables Celsius Network to earn from the digital assets it holds. The Ethereum network’s waiting list for new validators gets even longer since user deposits are kept frozen for withdrawals.

Wan made an estimation that if Celsius stakes all 428,000 tokens, the waiting period would likely increase to 45 days and be extended by six days and 15 hours.