Liquid staking protocol Lido Finance enabled staked ETH (stETH) withdrawals for the first time on Monday after updating the protocol to V2 on Ethereum.
Users who staked their ETH through the platform can now withdraw their stETH at a 1:1 ratio. So long as there is not an exit queue on the Beacon Chain, this process should typically take users no longer than a day to complete, according to an April 12 blog post from Lido.
Data from Parsec shows that $450,000 stETH has been withdrawn in the four hours since withdrawals went live.
stETH withdrawals dashboard:
– individual & aggregate withdrawal requests.
– current withdrawal queue.
– stETH large balance changes.https://t.co/HxZc2Izfax@parsec_finance @wilburforce_ pic.twitter.com/2ZBZWzcrTZ— mhonkasalo (@mhonkasalo) May 15, 2023
Users who submitted withdrawal requests also received a Lido-issued NFT representing their request, something that Lido incorporated into the unstaking process in March. Using this NFT, users would be able to claim their ETH rewards. The NFT would be burned after the users claim their ETH.
Among the many users testing out stETH withdrawals on Lido was bankrupt crypto lender Celsius, who executed a 0.1 stETH to ETH withdrawal request, according to blockchain data. However, Celsius has a far greater balance of stETH on Lido, worth more than $778 million at the time of writing.
Blockchain users noticed that Celsius’ wallet address moved 428,015 stETH around 10 minutes before Lido withdrawals went live.
If we assume 100% is withdrawn via Lido validators, that would contribute around 13k validators and a 7 day queue
— Westie 🟪 (@WestieCapital) May 15, 2023
If Celsius were to withdraw the entirety of their stETH, then the queue for validators to unstake on Lido might become considerably longer, pushing the average time to execute a request to over a week.
A bigger concern, particularly for Celsius creditors, was if the company planned to sell these tokens after redeeming them. However, according to Simon Dixon, CEO of investment firm Bnk To The Future, the redeemed stETH would be withdrawn and restaked directly on the Beacon Chain. Bnk To The Future was one of the companies that made a bid for Celsius’ assets earlier this year.
428k #Celsius $stETH on the move – likely lining up for staking directly without #LIDO in the middle. That’s the loan collateral proposed for NewCo. Should get an update during court hearing this week – 17th May – No court approval needed for this it seems https://t.co/pwT4fR1Qjt https://t.co/4tdSsMegA8
— Simon Dixon (@SimonDixonTwitt) May 15, 2023