Celsius Network is causing disruption with its new approach to staking ether (ETH), causing further congestion in the already lengthy queue to activate additional validators on the Ethereum network, which has been ongoing for a month.
Celsius Network’s $800M Ether Staking Shake-Up Stretches Ethereum Validator Queue to 44 Days
Crypto lender Celsius Network is causing disruption with its ether (ETH) staking strategy, resulting in congestion in the queue for activating new validators on the Ethereum network, which has already been ongoing for a month.
Recent data from Arkham Intelligence reveals that in just two days, Celsius transferred around $745 million worth of ETH into staking contracts, following the redemption of approximately $813 million in staked ETH from Lido Finance, a leading liquid staking provider.
As a result, the queue for establishing new validators on the Ethereum network has now stretched to 44 days, with Celsius potentially contributing almost a week of additional time to the delay, as noted by Tom Wan, an analyst at crypto investment product manager 21Shares.
These transfers are part of Celsius’ efforts to reorganize its staked ETH holdings since the implementation of Ethereum’s Shanghai upgrade, which allowed withdrawals from staking contracts starting in April. Previously, Celsius had around 460,000 ETH, currently valued at $870 million, staked with Lido Finance, and approximately 160,000 tokens, worth approximately $300 million at current prices, deployed in its own staking pool.
These transactions occur as Celsius undergoes a restructuring process following its filing for bankruptcy protection in July. The lender faced liquidity issues due to a sharp decline in cryptocurrency prices and a surge in user withdrawals.
Last week, the U.S. bankruptcy court auctioned off Celsius to the winning bidder, Fahrenheit, an investment group backed by Arrington Capital. Fahrenheit will assume control of Celsius’ assets, including its institutional loan portfolio, staked cryptocurrencies, and crypto mining units.
Crypto lender Celsius Network, which has faced significant challenges, is implementing changes to its strategy for staking ether (ETH). This adjustment is causing congestion in the queue for activating new validators on the Ethereum network, which has already been ongoing for a month.
Over a two-day period, Celsius has been actively transferring ETH into staking contracts following the redemption of approximately $813 million worth of staked ETH from prominent liquid staking provider Lido Finance.
Data from Arkham Intelligence indicates that since June 1, Celsius has deposited approximately $745 million worth of ETH. As a result of these transfers, the queue for establishing new validators on the Ethereum network has extended to 44 days, with Celsius potentially contributing nearly a week of additional time, as pointed out by Tom Wan, an analyst at crypto investment product manager 21Shares.
These transactions represent the latest developments in Celsius’ efforts to restructure its staked ETH holdings since Ethereum’s Shanghai upgrade in April, which allowed withdrawals from staking contracts. At that time, Celsius held around 460,000 ETH (now valued at $870 million) staked with Lido Finance and approximately 160,000 tokens (about $300 million at current prices) deployed in its own staking pool.
These transfers are taking place as the firm undergoes a restructuring process following its filing for bankruptcy protection in July. Celsius faced liquidity issues due to a significant decline in cryptocurrency prices and a wave of user withdrawals. Recently, the U.S. bankruptcy court auctioned Celsius to Fahrenheit, an investment group backed by Arrington Capital. Fahrenheit will acquire Celsius’ assets, including its institutional loan portfolio, staked cryptocurrencies, and crypto mining units.
In terms of Celsius’ staking maneuvers, the lender began by staking around $75 million of its available ETH with Figment, a non-custodial institutional staking service. Celsius also initiated the process of redeeming its 460,000 staked ETH from Lido as soon as withdrawals were permitted.
So far, Celsius has reclaimed 428,000 tokens worth $813 million. The assets were divided between two separate crypto addresses previously used by the firm for staking with Figment and depositing in its own staking pool, as indicated by blockchain data.
Celsius is still awaiting the receipt of 32,000 ETH from Lido. On Thursday, the firm transferred a total of 291,000 ETH, valued at $553 million, into staking contracts, according to a Dune Analytics chart by 21Shares. Of this, 192,000 tokens were deposited into the Celsius staking pool, while 99,000 tokens were staked with Figment, as reported by Wan.
On Friday, Celsius resumed the process of moving tokens into staking contracts, progressing towards staking the entire stash of 428,000 ETH. At the time of publication, the firm had staked approximately $199 million worth of ETH through Figment and deposited about $12 million into the Celsius staking pool, according to Arkham’s data.
Following the transfers, Celsius wallets still held approximately $109 million in ETH, as reported by Arkham.
Staking provides the troubled lender with an opportunity to earn rewards on their digital asset holdings during the ongoing freeze on user withdrawals. However, this also puts significant strain on an already congested queue for adding new validators to the Ethereum network. Validators, which are entities in a proof-of-stake blockchain, stake tokens to secure the network and validate transactions in exchange for incentives.
Since the activation of the Shanghai upgrade on April 12, the demand for staking has surged. According to data from blockchain intelligence firm Nansen, deposits have exceeded withdrawals by nearly $5.5 billion, resulting in a month-long waiting period for new participants to establish validators.
Celsius’ recent staking deposits have further extended the queue, with the estimated time to clear it now standing at 44 days and one hour, as reported by Ethereum tracking website Wenmerge. Analyst Tom Wan predicted that if Celsius commits all 428,000 tokens to staking, it would contribute an additional six days and 15 hours to the waiting time, ultimately increasing it to 45 days.
“Staking activation queue up only,” pseudonymous blockchain sleuth Alto, who was first to report Celsius’ transfer to staking wallets, tweeted.
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