The Ethereum validator exit queue reached 744,000 validators as of Saturday, July 26, its highest ever point in history. For context, the exit queue averaged roughly under 1,000 validators per day just two weeks ago. The exit queue spiking was likely caused by a mechanical liquidity shock on Aave’s borrow rates.
Over a week ago, roughly 167,000 ETH (worth over $630 million) was withdrawn from the Aave lending pool, driving Aave’s wETH borrow APR from ~3 % to double‑digits. The higher borrowing costs flipped a popular stETH/LRT loop‑leverage trading strategy from positive to negative carry, forcing vaults and whales to repay loans and look for raw ETH.
To get ETH, deleveragers redeemed stETH/wstETH and newer LRTs via the validator‑withdrawal path, causing the exit queue to spike. As a result, stETH slipped around 0.3%-0.6 % below par, causing arbitrageurs to buy the discount and join the exit queue to pocket the spread, compounding congestion.
More validators queuing led to longer waits, leading to bigger opportunity costs that led to even more stETH selling, causing a reflexive loop. This phenomenon is expected to be temporary with the exit queue to subside as Aave rates normalize, which would cause the stETH discount to close and arbitrage redemptions to clear.
Another reason for the spike in validator exits is EigenLayer’s reopening of its deposit caps, prompting operators to exit native validators or Lido, with much of this ETH expected to re-enter via restaked validators. This was evident by EigenLayer experiencing net inflows worth ~$940 million on Monday, July 21.
This is an excerpt from The Block’s Data & Insights newsletter. Dig into the numbers making up the industry’s most thought-provoking trends.
© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Trade Crypto On Coinhub Exchange
Trade Crypto On Coinhub Exchange
Stay ahead of the market by turning news insights into trading opportunities. With Coinhub Exchange, you can seamlessly buy, sell, and manage your digital assets, all in one secure platform. Take advantage of real-time market insights, deep liquidity, and fast execution for your favorite cryptocurrencies. Don’t just read about it — trade crypto now!
Disclaimer
The content of this article shown by Coinhub News, powered by The Block, is for informational purposes only and should not be construed as financial, legal, tax, or investment advice. Coinhub News and its affiliates are not a licensed financial advisor, legal advisor, broker, or tax advisor, and ... should not be considered as professional advice or a recommendation to engage in any specific investment, legal decision, or financial transaction. Cryptocurrency markets are highly speculative and volatile. Readers should perform their own independent research and consult with a qualified professional before making any financial or legal decisions. The opinions expressed in this article are those of the author and do not necessarily represent the views or opinions of the Company of its affiliates. Additionally, the Company does not make any representations or warranties regarding the accuracy, timeliness, reliability, or completeness of any information in this article. By accessing this content, you acknowledge that any reliance on the information contained in this article is solely at your own risk. The Company is not responsible for any financial losses, legal disputes, or other damages that may arise from reliance on this content or from any investment or legal decisions based on the information provided. Investing in cryptocurrencies involves substantial risks, including the risk of losing your entire investment, and you should carefully consider whether it is appropriate for your circumstances.
Read more
