ETH Unstaking Queue Hits Record High, Led by Justin Sun-Linked Addresses

Ethereum stakers trying to exit the network are now stuck in the longest waiting line the chain has ever experienced, with delays stretching far beyond the usual timeframe.

As of press time today, July 24, more than 660,000 ETH were pending withdrawal, according to data from Beaconchain. Based on current dynamics, validators face an estimated wait of more than 11 days, followed by an additional delay before their ETH becomes fully withdrawable and accessible.

Over the past week, large withdrawals of ETH liquidity from the Aave lending protocol seem to have contributed to this congestion. Addresses linked to Justin Sun and crypto exchange HTX — which rebranded from Huobi in 2023 and is affiliated with Sun and TRON — reportedly pulled significant amounts of ETH collateral, triggering a rise in borrowing costs on Aave from the usual 2-3% to over 10%.

These higher borrowing rates made “looping” strategies unprofitable for leveraged stETH — ETH staked in Ethereum liquid staking protocol Lido — leading holders to unwind their positions. As a result, Lido’s unfinalized withdrawal queue also hit a new all‑time high (not counting the protocol’s first withdrawal day), with over 235,000 stETH pending exit, Tom Wan, head of data at Entropy Advisors, revealed in an X post yesterday.

Wan detailed that in the past seven days, several large entities have been actively withdrawing stETH, including HTX and Justin Sun with about 80,000 stETH combined, Abraxas Capital with around 7,000 stETH, Jump Trading withdrawing approximately 5,500 stETH, and Etherefi with close to 5,400 stETH.

Limited Liquidity for stETH

According to Dune Analytics dashboards tracking liquidity across major automated market maker pools, stETH has roughly $775 million in AMM liquidity as of press time, which is a fraction of Lido’s roughly $33 billion total value locked (TVL).

Validators can exit the network only at a fixed rate per block, so when the queue grows longer, it takes more time to redeem stETH for ETH at a 1:1 rate. This delay caused stETH to trade below ETH because traders must lock up their funds during the wait to benefit from the price difference. As of press time, stETH is trading about just slightly below its ETH peg, according to data from CoinGecko.

Lucas Tcheyan, research associate at Galaxy Research, pointed out in a report shared with The Defiant that despite the uptick in demand, “ETH staking architecture operated as intended.”

“While some may complain about the large increases in queue times, this is a feature, not a bug, of the network. It is intended to limit the rate at which validators can enter or exit, thereby protecting the stability and security of Ethereum’s proof-of-stake consensus mechanism,” Tcheyan explained.

HTX-affiliated addresses have previously moved millions, and sometimes billions, across DeFi protocols, leading to sharp spikes in APY rates. In early July, The Defiant reported that interest rates on Aave’s USDT pool briefly climbed above 10% after addresses linked to the HTX exchange withdrew hundreds of millions in liquidity, demonstrating how fragile the DeFi lending market can be.