Ethereum News
Lido redemption queue faces pressure after 340,000 ETH unstaking surge
The unstaking backlog
A 340,000 ETH unstaking request hit the Ethereum network this month. This volume represents 1% of the total network.
Wait times increased.
If 1% of validators partially withdraw at once, it takes approximately 7 days and 1 hour to receive the ETH. This influx follows the Pectra upgrade which introduced EIP-7251 and EIP-7002. The surge also aligns with higher ETH borrow rates on Aave, which reached 18% in mid-July. These rates forced traders to unwind ETH looping strategies by selling liquid staking tokens to repay loans. This selling pressure pushed stETH prices lower relative to ETH. The sharp spike in unstaking requests was driven by the spread between staking yields and ETH borrow costs flipping negative. The instability in the lending market began in mid-June when a wallet tagged to the HTX exchange withdrew more than 167,000 ETH. The current redemption load tests the limits of Pectra-era liquidity.
The new withdrawal framework
Lido deployed the Triggerable Withdrawals framework in September 2026. This mechanism allows anyone to initiate a secure validator exit via the execution layer. It uses the EIP-7002 standard. This reduces reliance on node operators for exits.
| Feature | Specification |
|---|---|
| Max Effective Balance | 2048 ETH |
| Min Staking Amount | 32 ETH |
| Max Partial Withdrawals per Block | 8 |
| Max Auto Withdrawals per Block | 16 |
The Pectra upgrade increased the maximum effective balance from 32 ETH to 2048 ETH via EIP-7251. This allows validators to consolidate holdings into single nodes. Lido’s new framework complements this by providing a trust-minimized method to exit.
Lido provides exit flexibility.
Users initiate withdrawals by locking stETH in the WithdrawalQueue contract. The protocol then mints an unstETH NFT to represent the queued position. This NFT includes a unique incremental ID and the requested amount. While in the queue, users remain exposed to slashing risks to prevent attempts to avoid socialized losses. Once the AccountingOracle updates protocol balances, the protocol burns the stETH and finalizes the request. Users then burn their unstETH NFT to receive ETH at a 1:1 ratio. Under normal circumstances, this process takes between 1 and 5 days. Users can also exchange stETH for ETH or other tokens like USDC, USDT, USDS, or WBTC on decentralized exchanges. Lido’s scale magnifies the consequences of a technical failure or concentration-related backlash.
Liquidity and capacity
The 340,000 ETH request adds to a massive deposit queue. 2,229,411 ETH currently sits in the deposit queue. This amount represents 5.3 percent of the 42,240,256 ETH active balance.
The protocol activates 256 ETH per epoch. This limits the daily throughput to 57,600 ETH.
High ETH borrow rates on Aave hit 18% in mid-July. This surge forced traders to unwind ETH looping strategies. Traders sold liquid staking tokens to repay loans. This activity increased de-pegging pressure.
Traders sell tokens.
The 340,000 ETH unstaking request hits just as the network processes 37,498 pending deposits. The 340,000 ETH unstaking request arrives while the exit queue holds only two validators with 64 ETH between them, a negligible amount relative to the current 42 million ETH active balance. This situation differs from January 2024, when the queue had a wait time of six days as the failed crypto lender Celsius underwent a restructuring process requiring the withdrawal of 550,000 ETH. Will the current liquidity survive another massive de-peg? You should watch the stETH/ETH spread closely.
