Ethereum $11 billion withdrawal stuck for 42 days! Timed bomb may trigger DeFi crisis

Ethereum staking withdrawal queue has surged to a historic third-high, with 2.44 million ETH (worth 1.05 billion USD) locked for 42 days before being unlocked. Analysts warn that this is a systemic flaw, and the risk of stETH depeg could trigger a bank run in DeFi, threatening the 13 billion USD liquid staking market. Vitalik insists this is a secure design; who is right and who is wrong? This article provides an in-depth analysis of the Ethereum staking crisis and the associated risks in DeFi.

Ethereum withdrawal queue hits new high: 2.44 million ETH awaiting unlock

(Source: Dune Analytics)

According to Dune Analytics data, as of October 8, there are over 2.44 million ETH waiting to be withdrawn on the Ethereum network, with a total value exceeding 1.05 billion USD, making it the third highest record this month.

This figure is only second to the peak of 2.6 million ETH on September 11 and 2.48 million ETH on October 5, indicating a sustained high demand for validators to exit. More concerning is that ETH stakers are now facing an average withdrawal delay of 42 days and 9 hours, a phenomenon that has continued to worsen since CryptoSlate first discovered it in July.

Withdrawal Data Overview

The withdrawal demand is mainly concentrated on leading liquid staking token (LST) platforms, including Lido, EtherFi, Kiln, etc. These services allow users to stake ETH while maintaining liquidity through derivative tokens such as stETH, thus becoming the main source of withdrawal pressure.

Vitalik vs Community: Design Flaw or Security Guarantee?

In response to the community's doubts about the withdrawal delays, Ethereum co-founder Vitalik Buterin made it clear that this is an intentional security mechanism.

Vitalik likens staking to a disciplined form of network service, believing that delayed exits can:

Suppress short-term speculation: prevent validators from frequently entering and exiting, maintaining network stability.

Ensure long-term commitment: Validators must continuously be responsible for the security of the chain.

Enhance system stability: Avoid sudden large-scale exits impacting the network

However, anonymous ecosystem analyst Robdog strongly opposed this, calling the situation a potential "time bomb". He pointed out that longer exit times would amplify the duration risk for participants in the liquid staking market, which could trigger a vicious cycle.

Systemic Risks in DeFi Emerge: stETH Depeg May Trigger a Chain Reaction

Robdog warns that the withdrawal queue extension could have a huge systemic impact on DeFi, the lending market, and the use of LST as collateral.

stETH and other tokens typically trade at a price slightly lower than ETH, reflecting redemption delays and protocol risks. However, as the validator queue grows, these discounts will further widen:

· Price depeg mechanism:

Normal situation (45 days waiting period): stETH trading price 0.99 ETH, arbitrage annualized yield approximately 8%

Delay intensifies (90-day waiting period): Purchase motivation drops to 4%, peg gap widens.

Liquidity shock: Large-scale deleveraging events may force rapid unwinding of leverage, driving up borrowing rates.

· DeFi Chain Risk:

Collateral Crisis: stETH is widely used as collateral in protocols like Aave, and price deviations can affect the entire ecosystem.

Leveraged Cycle Collapse: Lido stETH locks up $13 billion, most of which is linked to leveraged positions.

Bank run risk: If an event similar to Terra/Luna or FTX occurs, a large demand for ETH withdrawals will encounter a limited amount available for withdrawal.

"If the exit period for an asset is extended from 1 day to 45 days, it is no longer the same asset," Robdog emphasizes.

Solutions and Risk Management Recommendations

Analysts proposed the following countermeasures:

1. Upgrade and exit queue throughput: Even if the throughput is increased by 100%, there is still enough collateral to ensure network security

2. Strengthen the risk management framework: The treasury and lending markets need to address the growing duration risk.

3. Pricing considerations for term discounts: Developers should incorporate exit time costs when pricing collateral.

4. Monitor liquidity indicators: Closely track the exchange rate of stETH to ETH and changes in borrowing rates.