Bankrupt crypto lender Celsius Network has made an $800 million ether (ETH) staking move that has led to significant delays in the Ethereum validator queue. Depositing $745 million of ETH into staking contracts in just two days, it’s no surprise their actions have caused the queue to stretch to 44 days, with Celsius potentially adding nearly a week of delay, as identified by Tom Wan of 21Shares.
This reshuffling of staked ETH holdings comes after Ethereum’s Shanghai upgrade, which enabled withdrawals from staking contracts. Previously, Celsius held 460,000 ETH ($870 million) staked with Lido Finance and deployed 160,000 tokens ($300 million) in their own staking pool. Reportedly, the company has withdrawn 428,000 staked Ethereum (stETH) valued at $780 million.
Celsius’ ongoing efforts to restructure following a bankruptcy protection filing in July coincide with this event. The company faced liquidity issues due to plummeting cryptocurrency prices and a surge in user withdrawals. Recently, the U.S. bankruptcy court auctioned off Celsius to Fahrenheit, an investment group backed by Arrington Capital, which will take over the lender’s assets, including the institutional loan portfolio, staked cryptocurrencies, and crypto mining units.
On May 25, Celsius Network announced the completion of the auction process to transfer the assets to crypto consortium Fahrenheit LLC. Despite these transfers, Celsius’ wallets still hold approximately $109 million worth of ETH, according to data from Arkham. Consequently, this influx of staking activity has imposed additional pressure on the Ethereum validator queue, already burdened with growing demand since the activation of the Shanghai upgrade on April 12.
With deposits exceeding withdrawals by almost $5.5 billion, new participants now face a month-long wait to set up validators, as blockchain intelligence firm Nansen reveals. While Celsius Network’s massive staking move may have impacted the Ethereum validator queue, it also highlights a broader issue within the network. Critics may argue for a more scalable and accessible network, while proponents will point towards Ethereum 2.0 and its transition to proof-of-stake as potential solutions.
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