Embattled crypto lender Celsius Network has been making waves in the crypto landscape as it significantly alters its ETH staking strategy. This move has led to an increased congestion in the already month-long queue to activate new validators on the Ethereum network. In just two days, Celsius has moved $745 million worth of ETH into staking contracts after redeeming around $813 million of staked ETH from liquid staking leader Lido Finance.
This chain of events can be traced back to Ethereum’s Shanghai upgrade in April that enabled withdrawals from staking contracts. At that time, Celsius held a sizable amount of staked ETH with Lido Finance, as well as in its own staking pool. The company’s pursuit to rearrange its staked ETH holdings intensified following the filing for bankruptcy protection in July due to plummeting cryptocurrency prices and a wave of user withdrawals.
Celsius Network’s restructure began by staking $75 million of its available ETH stash with non-custodial, institutional staking service Figment. The company then reclaimed the majority of its 460,000 staked ETH from Lido and divided the assets into two separate crypto addresses. This move has already caused a significant increase in the wait time for new validators on the Ethereum network, with estimations now at 44 days.
While staking allows the beleaguered lender to earn rewards on digital asset holdings during the withdrawal freeze on user deposits, this decision has also added considerable pressure to the Ethereum network. Validators, who guard the network and oversee transactions in exchange for rewards, already faced a month-long wait time to set up before Celsius’ latest staking deposits.
Demand for staking has skyrocketed since the Shanghai upgrade was activated on April 17th, with deposits surpassing withdrawals by nearly $5.5 billion. If Celsius commits all of its 428,000 tokens to staking, it would add an additional six days and 15 hours to the waiting time, increasing it to 45 days.
The implications of Celsius’ staking strategy have the potential to impact Ethereum’s ecosystem. It remains crucial for the community of crypto enthusiasts to stay informed and up-to-date on the latest developments, as the significance of these staking decisions by influential players can have long-lasting effects on the overall health and success of the blockchain space.
Source: Coindesk
