Celsius Allocates $745 Million Worth of ETH Staking, Causing Congestion on Ethereum Network
In a move that has reverberated throughout the cryptocurrency community, lending platform Celsius has swiftly withdrawn 428,000 ETH (equivalent to $813 million USD) from the Lido Finance staking protocol. As of now, Celsius still holds 32,000 ETH that has yet to be withdrawn from Lido.
On June 1st, Celsius began allocating the funds to various staking contracts, including 198,000 ETH to Celsius’ own staking pool and 197,000 ETH to Figment’s staking address. According to data from Arkham Intelligence, Celsius has successfully staked $745 million USD worth of ETH back into the Ethereum network.
– 198k (46%) ETH to their staking pool
– 197k (46%) ETH to an address that was used to stake ETH via @Figment_io
– 32k ETH remain
— Tom Wan (@tomwanhh) June 1, 2023
This substantial amount of ETH staking has caused the already congested Ethereum network to experience further delays. The network has been grappling with verification backlogs since the Shanghai upgrade, and this recent influx of Celsius’ staked ETH is expected to extend the processing time by an additional 6 days and 15 hours. In simpler terms, if investors decide to participate in staking and become validators for Ethereum at this time, they will have to wait 45 days for confirmation.
Celsius’ decision to bring back ETH staking is seen as an effort to seek additional profits to support its ongoing financial restructuring. Faced with financial pressures last year, the lending company encountered difficulties in converting its stETH back into ETH to meet user withdrawal demands. The funds generated from staking are expected to help Celsius meet its obligations to creditors.
Last week, Celsius’ assets were auctioned by a U.S. court, with Fahrenheit emerging as the winning bidder. Fahrenheit is an investment group supported by Arrington Capital and will now hold Celsius’ portfolios, including its lending organization, token staking, and crypto mining units.
The move by Celsius to allocate a significant portion of its assets to ETH staking showcases the company’s determination to navigate its financial challenges and provide returns to its debtors. However, the resulting strain on the Ethereum network underscores the pressing need for scalable solutions to alleviate congestion and ensure smooth transaction processing in the future.
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