Ethereum recorded its biggest validator exit of history this week, with over $10 billion worth of Ethereum waiting to withdraw from the Proof of Stake network, while institutional investors are entering the line of validator entries with billions of dollars in line.
Ethereum's exit queue exceeded 2.4 million Ether (ETH), worth more than $10 billion on Wednesday. According to blockchain data from ValidatorQueue.com, the surge in exits will increase validator queue times to more than 41 days and 21 hours.
Validators are responsible for adding new blocks and verifying transactions on the Ethereum network, and play a key role in their operations.
Ether Validator Queue. Source: validatorqueue.com
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Selling pressure concerns rise in $10 billion Ethereum exit queue
The surge in pending withdrawals has sparked new concerns about potential selling pressure on Ether holders.
This doesn't mean that all validators are trying to make a profit, but according to Cointelegraph's price index, considering that Ether's price has risen 83% over the past year, a significant amount of the $10 billion could be sold.
ETH/USD, 1 year chart. Source: Cointelegraph
In addition to concerns about selling pressure, the validator's exit queue is about five times larger than Ethereum's entry queue, holding more than 490,000 Ethers, which is currently scheduled to be staked, with latency of eight days and 12 hours.
Ethereum entrance and exit queues. sauce: validatorqueue.com
While concerns about short-term selling pressures still remain, the $10 billion withdrawals do not pose a threat to the stability of the Ethereum network, and the Ethereum network still boasts that over one million active validators stake 35.6 million Ether (29.4% of total supply).
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The development comes the day after Grayscale staking $150 million to Ether on Tuesday. This was when a cryptocurrency-focused asset manager introduced staking into Ether listed products, making it the first US-based cryptocurrency fund issuer to provide funds with staking-based passive income.
On Wednesday, Grayscale deposited another 272,000 Ether, worth $1.21 billion, into the staking queue. This means the company is “a large portion of the coin currently awaiting staking activation,” according to on-chain analyst EmberCN.
sauce: Ember CN
Despite the rising exits of validators, Ether's momentum continues to be driven by institutional inflows through exchange-traded funds (ETFs) and the Ministry of Corporate Treasury, Ilya Karchev, dispatch analyst at digital asset platform Nexo, told Cointelegraph:
“Currently, the Ministry of Institutional and Corporate Treasury holds more than 10% of the total supply of ETH, and ETF inflows already exceeded $620 million in October.”
He added, “The data reflects the evolution of Ethereum into a high yield and institutionally recognized asset, which has been used for both infrastructure and collateral purposes.”
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