Ethereum Staking Queue Surges Past 2 Million ETH Amid Kiln Shutdown

By: Eliza Bennet

Ethereum's staking exit queue has experienced a significant surge, surpassing the 2 million ETH mark as Kiln, one of the industry's key enterprise staking firms, initiates the shutdown of its validators. The queue currently shows a substantial amount of Ethereum lined up to exit the network, causing wait times for stakers trying to withdraw their assets to extend to approximately 43 days. Simultaneously, the availability for new staking is delayed by around two weeks. This shift in network activity reverses an earlier trend observed in September, where staking inflow briefly outpaced withdrawals for the first time since July.

The catalyst for Kiln's validator exits is linked to an exploit affecting the Swiss crypto wealth management platform, SwissBorg, which reported a significant loss of $40 million due to a compromised API. Kiln CEO Laszlo Szabo indicated that the firm decided to prioritize user protection by initiating a responsible exit of its Ethereum validators following the security breach.

While the exit process will take between 10 to 42 days to complete, users will continue to earn rewards, albeit with a delayed access of up to nine days to their withdrawn assets. Concurrently, Kiln has paused certain services to reinforce its infrastructure, ensuring a secure and reliable environment for its users. The company has vowed to maintain transparency throughout this transitional phase.

Despite potential concerns, Ethereum educator Anthony Sassano highlights that the withdrawn Ethereum is expected to be restaked using new validator keys, suggesting that it is unlikely to be sold, thereby minimizing market panic. As one of the largest institutional staking providers globally, Kiln's actions are being closely scrutinized, given its vast validator network and billions of dollars in staked assets.