• Ethereum unstaking queue hits a record 671,000 ETH worth $3.2B, with wait times near 12 days.
• Major liquid staking platforms Lido, EthFi, and Coinbase lead the withdrawals.
• Multiple factors drive exits, including leveraged position unwinds, stETH depegging fears, and profit-taking.

Ethereum’s network is experiencing an unprecedented wave of unstaking activity. According to researcher Ignas, 671,000 ETH, valued at approximately $3.2 billion, is now in the unstaking queue.

This influx has increased the average withdrawal wait time to approximately 12 days, a new network record. A look beneath the surface of the on-chain metrics reveals that the overwhelming majority of this activity is the result of the top three liquid staking providers.

Lido is in the lead with 285,000 ETH withdrawn, followed by EthFi with 134,000 ETH and Coinbase with 113,000 ETH. Lido’s own queue has also touched an all-time high, indicating the size of withdrawals on the platform.

Also Read: Ethereum Price Targets $5,210 Amid Massive Institutional Buying

Unwinding Leverage and Depegging Concerns

Another significant reason for the surge is the unwinding of leveraged Ethereum positions. A popular approach has been to stake ETH on Lido for stETH and thereafter use stETH on Aave to take loans in more ETH and continue the cycle in order to increase returns.

Nonetheless, with Aave’s borrow annual percentage yield of 2.65% and market rates in motion, most have opted to close such loops. The development started in July after major Ethereum holder Justin closed his leveraged staking positions.

Since then, there have been worries about the potential for wstETH or other liquid staking tokens to lose their peg to ETH. A small depeg could lead to large-scale liquidations and has encouraged many to exit early and save capital.

Compounding the issue, stETH has displayed modest but regular deviations from the worth of ETH. Arbitrageurs are making money by unstaking ETH and exchanging it for stETH and going through the cycle for short-term profits.

While such flows are characteristic of the natural operation of the market, the risk of another depeg is a strong incentive for unwinding.

Ethereum Holders Cash Out Amid Strong ETF Demand

The upswing in Ethereum prices over the past few months has also prompted profit-taking. Certain sizeable holders are taking profits, in particular, with institutional demand remaining strong in the form of digital asset trusts and ETF inflows.

Even with intense selling, ETF purchase flows have been substantial enough to soak up most of the supply.

Speculation is also growing that unstaking by some of the current holders might be front-running ahead of the possible release of an Ethereum staking ETF.

If those coins use already established staking infrastructures like Lido or create their own, significant liquidity shifts can result. While there isn’t much official information, the potential offer adds one more factor into the current market equation.

Also Read: Ethereum Inches to $4,891 ATH as $242 Million Shorts Get Wiped Out