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The Ethereum validator exit queue could rise sharply in the coming days after Kiln Finance announced plans to withdraw all its validators as a precautionary measure. The move follows a hack at SwissBorg, a Switzerland-based crypto wealth management platform, that exploited vulnerabilities in Kiln’s API.
Anthony Sassano, a prominent Ethereum educator, urged investors not to panic.
“This ETH will presumably be restaked using new validator keys, aka it’s not going to be sold,” Sassano said in a post on X.
At present, the Ethereum validator exit queue stands at 1,628,074 ETH, according to ValidatorQueue data. Roughly 35.5 million ETH, or 29.36% of the total supply, remains staked on the network. While mass exits can sometimes be interpreted as a bearish indicator, experts stress that the current activity is a technical safeguard, not a signal of sell-offs.
In a statement on Tuesday, Kiln Finance explained the reasoning behind its decision.
“Following our announcement yesterday regarding the Solana incident involving SwissBorg, Kiln is taking additional precautionary measures to safeguard client assets across all the networks,” the firm said.
The attack on SwissBorg drained approximately 193,000 Solana (SOL) tokens from its Earn program. While Ethereum assets were not directly impacted, Kiln opted to initiate what it called an “orderly exit” from its validators to ensure integrity.
“As part of this response, Kiln today began the orderly exit of all of its Ethereum validators. The exit process is a precautionary measure designed to ensure the integrity of the staked assets,” Kiln noted.
According to Kiln, the withdrawal of its validators will not happen overnight. The firm estimates the exit process will take between 10 and 42 days, depending on each validator’s position in the queue.
This delay stems from Ethereum’s proof-of-stake design, which limits how quickly validators can leave the network in order to maintain stability. As such, the Ethereum validator exit queue functions as both a security measure and a throttle against abrupt liquidity shocks.
Ether (ETH) is currently trading at $4,306, according to CoinMarketCap. Despite the headline risk, analysts note that ETH’s price action has remained resilient, suggesting markets are not interpreting Kiln’s move as a major negative.
The Ethereum validator exit queue has seen sharp spikes before. On Aug. 28, Ethereum recorded the largest validator withdrawal in its history, with more than 1 million ETH lined up to exit the network. Just a week later, on Sept. 3, the staking queue surged to its highest level since 2023 as institutional investors and treasury managers rushed to capture rewards.
“Exit queues are part of the natural rhythm of proof-of-stake networks,” said Laura Chen, Research Lead at Blockwave Analytics. “They don’t always mean selling pressure is coming. More often, they reflect technical adjustments, risk management, or portfolio rebalancing.”
While spikes in the Ethereum validator exit queue may raise concerns, industry experts stress that the situation is more orderly than alarming. The ETH being withdrawn is expected to be restaked under new validator keys, limiting any risk of mass selling.
For investors, the key takeaway is that Ethereum’s staking infrastructure is functioning as designed, with built-in mechanisms to absorb shocks and protect network stability.
“The fact that validators can exit in an orderly queue shows Ethereum’s resilience,” — James Murphy, Senior Analyst at Delphi Digital. “Rather than a red flag, it demonstrates how the system prioritizes security when stress events occur.”
As the Kiln exits unfold over the next several weeks, attention will remain on whether staked ETH flows back into the network which is a factor likely to shape sentiment around Ethereum’s medium-term price action.
