Ethereum stakers face 9-day wait as stETH loops fall into the red
Main Idea
Ethereum's validator exit queue surged past 475,000 validators, causing a 9-day unstaking wait and pushing stETH into a prolonged depeg due to Aave interest rate shocks and leveraged position liquidations.
Key Points
1. Ethereum's validator exit queue exceeded 475,000 validators, leading to a 9-day unstaking delay, the second-longest post-Merge.
2. Aave's ETH borrow rates spiked from ~3% to over 18%, making leveraged stETH positions unprofitable and causing loopers to sell stETH, which depegged it by 30-60 basis points.
3. ETH spot ETF inflows remained strong at $300-$600 million daily, absorbing selling pressure and keeping ETH's price stable despite stETH's depeg.
4. The stETH/ETH peg dropped to around 0.995, with onchain AMM liquidity for stETH falling from $280 million to $180 million.
5. Galaxy Research warns of systemic risks in Ethereum's liquid staking stack and calls for design improvements to prevent future instability.
Description
An Aave interest rate shock prompted over 475,000 validators to exit and pushed stETH into a prolonged depeg
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