This backlog trails only the 2.6 million ETH peak recorded on Sept. 11 and 2.48 million ETH on Oct. 5.
He compared staking to a disciplined form of service to the network, arguing that delayed exits reinforce stability by discouraging short-term speculation and ensuring validators remain committed to the chain’s long-term security.
The prolonged withdrawal queue has sparked debate within the Ethereum community, fueling concerns that it could become a systemic vulnerability for the blockchain network.
He said:
“The problem is that this could trigger a vicious unwinding loop which has massive systemic impacts on DeFi, lending markets and the use of LSTs as collateral.”
According to Robdog, queue length directly affects the liquidity and price stability of tokens like stETH and other liquid staking derivatives, which typically trade at a slight discount to ETH, reflecting redemption delays and protocol risks. However, as the validator queues lengthen, these discounts tend to deepen.
For instance, when stETH trades at 0.99 ETH, traders can earn roughly 8% annually by buying the token and waiting 45 days for redemption. However, if the delay period doubles to 90 days, their incentive to buy the asset falls to about 4%, which could further widen the peg gap.
Robdog cautioned that a sudden liquidity shock, such as a large-scale deleveraging event, could force rapid unwinds, pushing borrowing rates higher and destabilizing DeFi markets.
He wrote:
“If for example the market environment suddenly shifts, such that many ETH holders would like to rotate out of their positions (eg another Terra/Luna or FTX level event), there will be a significant withdrawal of ETH. However, only a limited amount of ETH can be withdrawn because the majority is lent out. This may cause a run on the bank.”
Considering this, the analyst cautioned that vaults and lending markets need stronger risk management frameworks to account for growing duration exposure.
According to him:
“If an asset’s exit duration stretches from 1 day to 45, it’s no longer the same asset.”
He further urged developers to factor in discount rates for the duration when pricing collateral.
Rondog wrote:
“Since LSTs are fundamentally a useful and systemic infrastructure to DeFi, we should consider making upgrades to the throughput of the exit queue. Even if we increased throughput by 100%, there would be ample stake to secure the network.”
