Lido Redemption Queue Faces Pressure from 340,000 ETH Unstaking Surge
A recent surge in unstaking requests has put pressure on Lido's redemption queue, with 340,000 ETH being withdrawn from the protocol in a single month. This represents approximately 1% of the total Ethereum network, causing wait times to increase for validators seeking to partially withdraw their funds.
The influx of withdrawals is largely due to higher ETH borrow rates on Aave, which reached 18% in mid-July. This led traders to unwind their ETH looping strategies by selling liquid staking tokens to repay loans, putting downward pressure on the price of stETH relative to ETH.
The sharp spike in unstaking requests was driven by the spread between staking yields and ETH borrow costs flipping negative. The current liquidity situation is being put to the test as Lido's new withdrawal framework, deployed in September 2026, allows for trust-minimized exits via the execution layer.