Kraken set to unstake more than $1 billion worth of ETH after Shapella upgrade

U.S. crypto exchange Kraken has initiated withdrawal requests for their stakes following the Shapella upgrade that introduced ether (ETH) withdrawals.

The upgrade has resulted in a massive influx of withdrawal requests, surpassing $1.5 billion, including both partial and full exits. Kraken provides a staking service that streamlined the Ethereum staking process, allowing users to deposit into the platform and create validators on their behalf.

This development follows Kraken’s settlement of charges brought by the Securities and Exchange Commission for allegedly failing to register the offer and sale of its staking program in the U.S. Kraken agreed to pay a $30 million fine.

In response, Kraken has requested to withdraw over 551,000 ETH (valued at $1 billion), accounting for more than 65% of the 820,000 ETH (approximately $1.5 billion) currently in the queue for withdrawal from the network, according to data from Nansen. 

The amount of ETH waiting to be withdrawn by Kraken does not represent its entire stake, but rather a portion of its 1.25 million ETH ($2.5 billion) staked on Ethereum.

ETH waiting for withdrawal | Source: Nansen

Kraken previously announced that it would automatically begin unstaking all ether for its U.S. clients due to regulatory measures. Despite Kraken’s request to exit validator stakes, it is still subject to the validator exit queue wait time on Ethereum.

Kraken, the third-largest stakeholder on Ethereum behind Lido Finance and Coinbase according to the Dune Analytics dashboard, is expected to slide into that position once the withdrawal queue is processed in a few days.

Currently, 17.4 million ether is staked (excluding rewards) on the Ethereum network, accounting for 15% of the total ether supply. Since the Shapella upgrade went live, the net staking balance has decreased by 94,581 ether (valued at $189 million), based on Nansen data.

Kraken did not immediately respond to a request for comment.

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