Crypto lender Celsius Network pushes ETH validator queue to 44 days by staking $745m

Updated: 03 June 2023

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Celsius Network, the embattled crypto lender, decided to shake up its ETH staking strategy over the last several days.

Between June 1 and June 3, the company has been moving ETH into staking contracts after it redeemed $813 million of staked Ethereum from Lido Finance, a liquid staking leader.

In total, the company deposited $745 million of ETH in just two days, according to data by Arkham Intelligence.

However, as a consequence of this, the company also ended up congesting the already month-long queue for activating new validators on the Ethereum network.

The company made numerous transfers that stretched the long queue to a new length of 44 days.

In other words, Celsius Network itself is responsible for the waiting period being longer for a full week now, according to 21Shares analyst Tom Wan.

Celsius just sent 222k $ETH from their $stETH withdrawal address to their own ETH Staking Pool

If they stake all 428k ETH via their staking pool, it will become the 7th largest entity in $ETH Staking with 586k ETH Staked, excluding unknown

Kudos to @etheraltog for the spot 🫡 https://t.co/f6iSZS9T3c pic.twitter.com/SHSJoqzTdT

— Tom Wan (@tomwanhh) June 1, 2023

The series of transactions comes as the latest move in the lender’s efforts to reshuffle its stash of staked Ether.

The company has been at it since Ethereum’s Shanghai upgrade, which enabled withdrawals from staking contracts.

Until then, the firm held 460,000 ETH, which is worth around $870 million according to current prices.

The funds were staked with a liquid staking company Lido Finance. Around 160,000 tokens ($300 million) were deployed in its own staking pool.

After filing for bankruptcy protection last July, the company started a restructuring process, which was when the transfers started to occur.

The bankruptcy itself came due to liquidity problems, as the crypto prices continued to crash, and users started performing mass withdrawals.

Only last week, the US bankruptcy court auctioned the lender to Fahrenheit, the winning bidder.

This is an investment group backed by Arrington Capital, which intends to assume the company’s assets. That also includes its institutional loan portfolio, crypto mining units, and staked digital assets.

Celsius’ staking activity and how it affects ETH validators

The lender’s plan to shake up its staking allocations started with a decision to stake $75 million of its ETH stash using Figment, a non-custodial institutional staking platform.

Celsius then requested to redeem 460,000 ETH that it had staked with Lido as soon as the platform started allowing withdrawals again.

Recently, it claimed 428,000 ETH coins, worth around $813 million.

The assets were split into two addresses that the company used for staking with Figment in the past and depositing funds in its own staking pool.

This leaves 32,000 ETH which the firm is still waiting to receive from Lido.

Celsius just sent 222k $ETH from their $stETH withdrawal address to their own ETH Staking Pool

If they stake all 428k ETH via their staking pool, it will become the 7th largest entity in $ETH Staking with 586k ETH Staked, excluding unknown

Kudos to @etheraltog for the spot 🫡 https://t.co/f6iSZS9T3c pic.twitter.com/SHSJoqzTdT

— Tom Wan (@tomwanhh) June 1, 2023

As some may know, staking significantly stresses the Ethereum network, causing a rather overcrowded queue for adding new validators.

Validators are individuals and entities in a PoS blockchain who stake cryptocurrencies and contribute to network security.

They are also in charge of overseeing transactions, for which they are rewarded with new tokens.

Following the Shanghai upgrade, demand for staking skyrocketed, and deposits surpassed withdrawals by nearly $5.5 billion.

As a result, anyone new who wants to join the validators had to wait a month. With Celsius’ recent activity, that period has increased, lasting for 44 days.

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