"Surging 72,000% in 2 weeks"...Is Ethereum collapsing under an exodus?

▲ Ethereum (ETH)

Market tension is escalating as the Ethereum (ETH) validator withdrawal queue surged by 70,000% in just two weeks, reaching 433,158 ETH.

On May 3 (local time), BeInCrypto reported that the size of the Ethereum validator withdrawal queue surged, with waiting times reaching 7 days. This situation was crucially impacted by the aftermath of a DeFi hacking incident that triggered restaking withdrawals. The total amount of virtual assets stolen in April amounted to $625 million across 30 incidents, marking the worst record in the history of virtual asset hacking.

In particular, the KelpDAO bridge incident, which saw $292 million evaporate, shook the market. LayerZero identified the North Korean Lazarus Group as being behind this attack. The attackers stole 116,500 rsETH through a vulnerable cross-chain bridge. This directly hit restaking tokens and the lending market. Aave deposits plummeted from $45.8 billion to $28.6 billion. The total value locked (TVL) in the DeFi market has decreased by approximately 30% over the past 12 weeks.

On-chain analyst Checkmatey pointed out via X (formerly Twitter) that "funds are flowing out of all forms of DeFi as the risk shifts towards unrecoverable principal." With liquid restaking tokens, bridges, and lending markets becoming the main targets of this hacking wave, investor fear has reached its peak.

However, despite this pessimistic trend, the underlying strength of the Ethereum staking market appears to remain robust. According to a website providing validator queue information, 3.6 million ETH are currently waiting to enter staking. This is approximately 7 times the size of the withdrawal queue, and the entry waiting time is recorded at 62 days.

The total amount of Ethereum currently staked is 38.6 million ETH, accounting for 31.72% of the total supply. The annual yield is around 2.92%, and the number of active validators is close to 900,000. This increase in the withdrawal queue is analyzed as a temporary fund circulation due to a security incident, rather than a structural decline in the staking market. It is expected that once the aftermath of the security incident subsides, the queue figures will return to normal, similar to past cases.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*