Digital

Bankrupt Celsius Restakes Ethereum, Causing Delays in Staking Activation Queue

Picture Source: beincrypto

Crypto lender Celsius recently made headlines as it underwent bankruptcy proceedings, which impacted its staking activities involving Ethereum (ETH). Despite the ongoing restructuring, the company has not exited ETH staking but rather altered its staking methods. The decision to restake its withdrawn staked ETH has further elongated the staking activation queue, creating a ripple effect within the Ethereum ecosystem.

Celsius’ ETH Withdrawals and Restaking:

Following the Shanghai upgrade in April, Celsius became one of the most active entities in the industry, making significant withdrawals from various staking platforms. Initially, it unstaked 6,000 ETH from the Beacon Chain and subsequently withdrew all its staked ETH on Lido Finance, a total of 428,000 ETH. Notably, the lender still has 32,000 ETH awaiting withdrawals from the staking protocol.

After holding the withdrawn ETH in its unstaking wallet for approximately two weeks, Celsius proceeded to restake the funds. The lender divided the ETH into two deposit wallets: the “Celsius’s ETH2 Deposit” and “Staked ETH.” Around 46% of the withdrawn ETH was staked via Figment using the “Staked ETH” wallet, while the remaining amount valued at $60 million is still held in the Unstaking wallet. Celsius deposited $374 million into Figment and sent $371 million into its Beacon Deposit Contract, resulting in a current holding of about 57,000 ETH, worth approximately $108 million.

Implications for Ethereum Validators:

Celsius’s substantial deposits have contributed to the growing congestion in the Ethereum validator queue, impacting the onboarding of new validators onto the network. According to Wenmerge, the influx of validators has increased the queue size to 92,761, with an estimated completion time of 45 days and 17 hours. This congestion is a direct result of the rate at which Celsius’s deposits have surpassed withdrawals since the Shanghai upgrade. Token Unlocks data reveals that approximately 6 million ETH has been deposited since the upgrade, leaving a net staking balance of 3.03 million ETH at the time of writing.

Conclusion:

Celsius’s bankruptcy proceedings have had a notable impact on the Ethereum staking ecosystem. The decision to restake withdrawn funds has not only extended the staking activation queue but has also congested the process of onboarding new validators. As Celsius continues to navigate its restructuring, the industry will closely observe the outcome and potential consequences for the broader crypto lending and staking landscape.

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