The first wave of validator exits since Ethereum's transition to PoS

According to The Defiant, the number of Ethereum validators has decreased by about 10% since July, falling back to levels seen in April 2024. This marks the first occurrence of a sustained exit of validators since the transition to a proof-of-stake mechanism.

As of November 11, the number of daily active Ethereum validators has dropped below 1 million for the first time since April 28, currently standing at 999,203. The waiting time for the exit queue has reached a historic high of 17.6 days; meanwhile, the waiting time for validators to join has surged to 22 days, with approximately 1.2 million ETH awaiting staking.

Clemens Scarpatetti, CEO of CryptoCrew Validators, stated that the decline in active validators reflects a mix of cyclical and structural factors, including long-term stakers taking profits after strong performance in ETH during the second and third quarters, as well as large withdrawals from liquidity staking providers like Lido.

The decline in staking yields is also a significant factor. As of the time of writing, the annualized staking yield for Ethereum is approximately 2.9%, a substantial drop from the record 8.6% in May 2023. Meir Rosenschein, Product Director at DcentraLab, noted that the decrease in staking yields and rising borrowing costs have rendered leveraged staking unprofitable.

Dune data shows that the decentralized staking protocol Lido leads the market with over 8.4 million ETH, accounting for more than 23%. Binance and Coinbase hold approximately 9.2% and 6.5% of the staked ETH share, respectively.