Ethereum validator queue hits highest level since September 2023

Staking on Ethereum has become all the rage recently with the recent popularization of restaking, which we talked about a bit last week.

In a fun update, EigenLayer did launch on the Ethereum mainnet last week along with its EigenDA data availability layer. Coinbase Cloud and Google Cloud are among the protocol’s first operators, and it announced six actively validated services that will be secured through EigenLayer’s restaking on Friday.

This launch opens up restakers on the platform to actually start earning additional yield on their staked ETH, which previously they were not. For the most part, people were depositing early into the protocol in anticipation of the higher yield and for speculation of an airdrop as EigenLayer dealt out restaking points.

Naturally, in order to use EigenLayer, you have to first be staking ETH. You can either do that yourself by spinning up a validator, or you can use a liquid staking protocol to get a staking derivative token to deposit. To get your hands on liquid staking token, or LST, you can deposit to one of these protocols, or you can also buy them since the point of having an LST is to give the holders liquidity, and some people are looking to get access to the underlying value.

Since one of the main ways to get into EigenLayer is to contribute to securing Ethereum, we have seen a surge in new validators recently.

Expand Chart

As a reminder, Ethereum completed The Merge back in September 2022, converting the network to Proof-of-Stake. Prior to The Merge, people were already allowed to spin up a validator on the Beaconchain, which was running in parallel with the Ethereum mainnet.

But staking really exploded in popularity in the wake of the Shapella upgrade, which took place in April 2023 and enabled withdrawals of the staked ETH, which previously could not be accessed. The withdrawal feature gave some people peace of mind that their funds were safe and could be returned.

In turn, there became a huge line of validators looking to join the Ethereum network. The validator queue got as long as 96,000 back in June 2023. The validator entry queue is essentially in place to ensure stability in the Ethereum network and prevent too many validators from coming online (or leaving in the case of the exit queue) in one epoch. But as time moved on, the queue cleared out and the rush into becoming an Ethereum validator slowed. The queue stayed below 10,000 from October 2023 through the end of March this year.

But now, as more people try to join in on the restaking hype, the validator entry queue has climbed to 20,000, signaling strong demand to secure the network.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry’s most thought-provoking trends.