{"id":48073,"date":"2025-09-17T16:01:49","date_gmt":"2025-09-17T16:01:49","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=48073"},"modified":"2025-09-17T16:01:49","modified_gmt":"2025-09-17T16:01:49","slug":"the-protocol-eth-exit-queue-gridlocks-as-validators-pile-up","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=48073","title":{"rendered":"The Protocol: ETH Exit Queue Gridlocks As Validators Pile Up"},"content":{"rendered":"<div>\n<p>Welcome to The Protocol, CoinDesk&#8217;s weekly wrap of the most important stories in cryptocurrency tech development. I\u2019m Margaux Nijkerk, a reporter at CoinDesk.<\/p>\n<p>In this issue:<\/p>\n<ul>\n<li>Ethereum Faces Validator Bottleneck With 2.5M ETH Awaiting Exit<\/li>\n<li>Is Ethereum\u2019s DeFi Future on L2s? Liquidity, Innovation Say Perhaps Yes<\/li>\n<li>Ethereum Foundation Starts New AI Team to Support Agentic Payments<\/li>\n<li>American Express Introduces Blockchain-Based \u2018Travel Stamps\u2019<\/li>\n<\/ul>\n<div style=\"display:none\">Unknown block type &#8220;divider&#8221;, specify a component for it in the `components.types` option<\/div>\n<h3>Network News<\/h3>\n<p><strong>ETHEREUM VALIDATOR EXIT QUEUE FACES BOTTLENECK:<\/strong> Ethereum\u2019s proof-of-stake system is facing its largest test yet. As of mid-September, roughly 2.5 million ETH \u2014 valued at roughly $11.25 billion \u2014 is waiting to leave the validator set, according to <a href=\"https:\/\/www.validatorqueue.com\/\">validator queue dashboards<\/a>. The backlog pushed exit wait times to more than 46 days on Sept. 14, the longest in Ethereum\u2019s short staking history, dashboards <a href=\"https:\/\/www.validatorqueue.com\/\">show<\/a>. The last peak, in August, put the exit queue at 18 days. The initial spark came on Sept. 9, when Kiln, a large infrastructure provider, chose to exit <a href=\"https:\/\/www.coindesk.com\/tech\/2025\/09\/10\/kiln-exits-ethereum-validators-in-orderly-move-following-swissborg-exploit\">all of its validators as a safety precaution<\/a>. The move, triggered by recent security incidents including the <a href=\"https:\/\/www.coindesk.com\/tech\/2025\/09\/08\/ledger-cto-warns-of-npm-supply-chain-attack-hitting-1b-downloads\">NPM supply-chain attack<\/a> and <a href=\"https:\/\/www.coindesk.com\/tech\/2025\/09\/09\/swissborg-s-sol-earn-wallet-exploited-for-usd41-5m-after-partner-s-api-is-compromised\">the SwissBorg breach<\/a>, pushed <a href=\"https:\/\/dune.com\/hildobby\/eth2-staking\">around 1.6 million ETH<\/a> into the queue at once. Though unrelated to Ethereum\u2019s staking protocol itself, the hacks rattled confidence enough for Kiln to hit pause, highlighting how events in the broader crypto ecosystem can cascade into Ethereum\u2019s validator dynamics. In <a href=\"https:\/\/figment.io\/insights\/ethereums-exit-queue-hits-record-high-what-stakers-need-to-know\/?utm_source=blog&amp;utm_medium=email&amp;utm_campaign=protocol-newsletter&amp;utm_term=eth-queue&amp;utm_medium=Email&amp;utm_source=Pardot&amp;utm_campaign=Newsletter-Series-1\">a blog post from staking provider<\/a> Figment, Senior Analyst Benjamin Thalman noted that the current exit queue build up isn\u2019t only about security. After ETH has <a href=\"https:\/\/www.coindesk.com\/price\/ethereum\">rallied more than 160%<\/a> since April, some stakers are simply taking profits. Others, especially institutional players, are shifting their portfolios&#8217; exposure. At the same time, the number of validators entering the Ethereum staking ecosystem has been steadily rising. Ethereum\u2019s churn limit, which is a protocol safeguard that caps how many validators can enter or exit over a certain time period, is currently capped at 256 ETH per epoch (about 6.4 minutes), restricting how quickly validators can join or leave the network. The churn limit is meant to keep the network stable. With more than 2.5M ETH lined up, stakers on Sept. 16 face 44 days before even reaching the cooldown step. \u2014 <em>Margaux Nijkerk<\/em> <a href=\"https:\/\/www.coindesk.com\/tech\/2025\/09\/16\/ethereum-faces-validator-bottleneck-with-2-5m-eth-awaiting-exit\">Read more<\/a>.<\/p>\n<\/p>\n<p><strong>IS L2 DEFI EATING AT ETHEREUM\u2019S L1 DEFI?: <\/strong>Ethereum is in the midst of a paradox. Even as ether hit record highs in late August, decentralized finance (DeFi) activity on Ethereum\u2019s layer-1 (L1) looks muted compared to its peak in late 2021. Fees <a href=\"https:\/\/tokenterminal.com\/explorer\/projects\/ethereum\/metrics\/revenue?granularity=month\">collected on mainnet<\/a> in August were just $44 million, a 44% drop from the prior month. Meanwhile, layer-2 (L2) networks like Arbitrum and Base are booming, with $20 billion and $15 billion <a href=\"https:\/\/l2beat.com\/scaling\/summary\">in total value locked<\/a> (TVL) respectively. This divergence raises a crucial question: are L2s cannibalizing Ethereum\u2019s DeFi activity, or is the ecosystem evolving into a multi-layered financial architecture? AJ Warner, the chief strategy officer of Offchain Labs, the developer firm behind layer-2 Arbitrum, argues that the metrics are more nuanced than just layer-2 DeFi chipping at the layer 1.In an interview with CoinDesk, Warner said that focusing solely on TVL misses the point, and that Ethereum is increasingly functioning as crypto\u2019s \u201cglobal settlement layer,\u201d a foundation for high-value issuance and institutional activity. Products like Franklin Templeton\u2019s <a href=\"https:\/\/www.coindesk.com\/business\/2024\/11\/14\/franklin-templeton-expands-410m-money-market-fund-to-ethereum-blockchain\">tokenized funds<\/a> or BlackRock\u2019s BUIDL product launch directly on Ethereum L1 \u2014 activity that isn\u2019t fully captured in DeFi metrics but underscores Ethereum\u2019s role as the bedrock of crypto finance. Ethereum as a layer-1 blockchain is the secure but relatively slow and expensive base network. Layer-2s are scaling networks built on top of it, designed to handle transactions faster and at a fraction of the cost before ultimately settling back to Ethereum for security. That\u2019s why they\u2019ve become so appealing to traders and builders alike. Metrics like TVL, the amount of crypto deposited in DeFi protocols, highlight this shift as activity is moved to L2s where lower fees and quicker confirmations make everyday DeFi far more practical. \u2014 <em>Margaux Nijkerk <\/em><a href=\"https:\/\/www.coindesk.com\/tech\/2025\/09\/15\/is-ethereum-s-defi-future-on-l2s-liquidity-innovation-say-perhaps-yes\">Read more<\/a>.<\/p>\n<\/p>\n<p><strong>EF STARTS DECENTRALIZED AI TEAM: <\/strong>The <a href=\"https:\/\/www.coindesk.com\/tag\/ethereum-foundation\">Ethereum Foundation<\/a> (EF) is creating a dedicated artificial intelligence (AI) group to make Ethereum the settlement and coordination layer for what it calls the \u201cmachine economy,\u201d according to research scientist <a href=\"https:\/\/www.linkedin.com\/in\/davidecrapis\/\">Davide Crapis<\/a>. Crapis, who <a href=\"https:\/\/x.com\/DavideCrapis\/status\/1967573374911340975\">announced<\/a> the initiative on X, said the new dAI Team will pursue two priorities: enabling AI agents to pay and coordinate without intermediaries, and building a decentralized AI stack that avoids reliance on a small number of large companies. He said Ethereum\u2019s neutrality, verifiability and censorship resistance make it a natural base layer for intelligent systems. The EF is a non-profit organization based in Zug, Switzerland, that funds and coordinates the development of the Ethereum blockchain. It does not control the network but plays a catalytic role by supporting researchers, developers and ecosystem projects. Its remit includes funding upgrades such as Ethereum 2.0, zero-knowledge proofs and layer-2 scaling, alongside community programs like the Ecosystem Support Program. The foundation also organizes events such as Devcon to foster collaboration and acts as a policy advocate for blockchain adoption. In 2025, <a href=\"https:\/\/www.coindesk.com\/tech\/2025\/06\/02\/ethereum-foundation-lays-off-some-staff-amid-rd-restructuring\">EF restructured<\/a> to handle Ethereum\u2019s growth, emphasizing ecosystem acceleration, founder support and enterprise outreach. The new dAI Team represents a continuation of this shift toward specialized units addressing emerging technologies. \u2014 <em>Siamak Masnavi <\/em><a href=\"https:\/\/www.coindesk.com\/tech\/2025\/09\/15\/ethereum-foundation-launches-ai-team-to-support-agentic-payments\">Read more<\/a>.<\/p>\n<\/p>\n<p><strong>AMERICAN EXPRESS DABBLES IN BLOCKCHAIN TRAVEL STAMPS: <\/strong>American Express has introduced Ethereum-based &#8220;travel stamps&#8221; to create a commemorative record of travel experiences. The travel experience tokens, which are technically NFTs (ERC 721 tokens), are minted and stored on Coinbase\u2019s Base network, said Colin Marlowe, vice president of Emerging Partnerships at Amex Digital Labs. The travel stamps, which can be collected anytime a traveler uses their card, are not tradable NTF tokens, Marlowe said, and neither do they function like blockchain-based loyalty points \u2014 at least for the time being. \u201cIt&#8217;s a valueless ERC-721, so technically an NFT, but we just didn&#8217;t brand it as such. We wanted to speak to it in a way that was natural for the travel experience itself, and so we talk about these things as stamps, and they&#8217;re represented as tokens,\u201d Marlowe said in an interview. \u201cAs an identifier and representation of history the stamps could create interesting partnership angles over time. We weren&#8217;t trying to sell these or sort of generate any like short term revenue. The angle is to make a travel experience with Amex feel really rich, really different, and kind of set it apart,\u201d he said. Fireblocks is also involved, supporting Amex as its Wallet-as-a-Service provider for the passport product, a Fireblocks representative said. The Amex travel app also includes a range of tools for travels and Centurion Lounge upgrades, the company said. \u2013 <em>Ian Allison<\/em> <a href=\"https:\/\/www.coindesk.com\/tech\/2025\/09\/15\/american-express-introduces-blockchain-based-travel-stamps\">Read more<\/a>.<\/p>\n<\/p>\n<div style=\"display:none\">Unknown block type &#8220;divider&#8221;, specify a component for it in the `components.types` option<\/div>\n<h3><strong>In Other News<\/strong><\/h3>\n<ul>\n<li>Blockchain-based real world asset (RWA) specialists Centrifuge and Plume have launched the Anemoy Tokenized Apollo Diversified Credit Fund (ACRDX), backed by a $50 million anchor investment from Grove, a credit infrastructure protocol within the Sky Ecosystem. The fund gives blockchain investors exposure to Apollo\u2019s diversified global credit strategy, spanning direct corporate lending, asset-backed lending and dislocated credit, a type of mispriced debt due to market stress and lack of liquidity. ACRDX will be distributed through Plume\u2019s Nest Credit vaults under the ticker nACRDX, making the strategy accessible to institutional investors on-chain. By packaging Apollo\u2019s portfolio in tokenized form, the fund aims to lower entry barriers and increase transparency for investors seeking exposure to private credit markets, according to a press release. \u2014 <em>Ian Allison <\/em><a href=\"https:\/\/www.coindesk.com\/business\/2025\/09\/16\/blockchain-based-rwa-specialists-bring-usd50m-to-apollo-s-tokenized-credit-strategy\">Read more<\/a>.<\/li>\n<li>Google is taking a step toward merging artificial intelligence (AI) and digital money, rolling out a new open-source protocol that lets AI applications send and receive payments, which includes support for stablecoins, digital tokens pegged to fiat currencies such as the U.S. dollar, according to a <a href=\"https:\/\/cloud.google.com\/blog\/products\/ai-machine-learning\/announcing-agents-to-payments-ap2-protocol\">press release<\/a>. To incorporate stablecoin rails, Google teamed up with the U.S.-based crypto exchange Coinbase, which has been developing its own AI-integrated payments infrastructure. The company also worked with the Ethereum Foundation and coordinated with more than 60 other organizations, including Salesforce, American Express and Etsy, to cover traditional finance use cases. The move builds on Google\u2019s earlier work to <a href=\"https:\/\/codelabs.developers.google.com\/devsite\/codelabs\/building-ai-agents-vertexai#0\">establish a standard for \u201cAI agents.\u201d<\/a> These digital agents may eventually handle complex tasks, such as negotiating mortgages or shopping for clothes, without direct human input. \u2014 <em>Oliver Knight <\/em><a href=\"https:\/\/www.coindesk.com\/business\/2025\/09\/16\/google-teams-up-with-coinbase-to-bring-stablecoin-payments-to-ai-apps\">Read more<\/a>.<\/li>\n<\/ul>\n<div style=\"display:none\">Unknown block type &#8220;divider&#8221;, specify a component for it in the `components.types` option<\/div>\n<h3><strong>Regulatory and Policy<\/strong><\/h3>\n<ul>\n<li>Contrary to claims from the U.S. banking industry, stablecoins do not pose a risk to the financial system, according to the chief policy officer at crypto exchange Coinbase (COIN), <a href=\"https:\/\/www.linkedin.com\/in\/faryar-shirzad-55167b76\/\">Faryar Shirzad<\/a>. Banks&#8217; claims that they do are are myths crafted to defend their revenues, he wrote in a <a href=\"https:\/\/www.coinbase.com\/en-gb\/blog\/Rejecting-the-Banks-Deposit-Erosion-Myth\">blog post<\/a>. &#8220;The central claim \u2014 that stablecoins will cause a mass outflow of bank deposits \u2014 simply doesn\u2019t hold up,&#8221; Shirzad wrote. &#8220;Recent analysis shows no meaningful link between stablecoin adoption and deposit flight for community banks and there\u2019s no reason to believe big banks would fare any worse.&#8221; Larger lenders still hold trillions of dollars at the Federal Reserve and if deposits were really at risk, he argued, they would be competing harder for customer funds by offering higher interest rates rather than parking cash at the central bank. According to Shirzad, the real reason for banks&#8217; opposition is the payments business. <a href=\"https:\/\/www.coindesk.com\/learn\/what-is-a-stablecoin\">Stablecoins<\/a>, digital tokens whose value is pegged to a real-life asset such as the dollar, offer faster and cheaper ways to move money, threatening an estimated $187 billion in annual swipe-fee revenue for traditional card networks and banks. He compared the current pushback to earlier battles against ATMs and online banking, when incumbents warned of systemic dangers but, he said, were ultimately trying to protect entrenched profits. \u2014 <em>Jesse Hamilton <\/em><a href=\"https:\/\/www.coindesk.com\/policy\/2025\/09\/16\/coinbase-policy-chief-pushes-back-on-bank-warnings-that-stablecoins-threaten-deposits\">Read more<\/a>.<\/li>\n<li>U.S. SEC Chair Paul Atkins said crypto\u2019s time has come, pledging to modernize the U.S. securities rulebook and expand \u201cProject Crypto\u201d to bring markets on-chain. <a href=\"https:\/\/www.sec.gov\/newsroom\/speeches-statements\/atkins-keynote-address-inaugural-oecd-roundtable-global-financial-markets-091025\">Speaking in Paris<\/a> on Sept. 10 at the OECD\u2019s inaugural Roundtable on Global Financial Markets, Atkins said the SEC is shifting away from enforcement-driven policymaking and will provide clear rules for tokens, custody, and trading platforms. \u201cPolicy will no longer be set by ad hoc enforcement actions,\u201d he said, calling the new approach \u201ca golden age of financial innovation on U.S. soil.\u201d Atkins said most tokens are not securities and promised bright-line rules for determining when crypto assets fall under SEC oversight. He said entrepreneurs must be able to raise capital on-chain without \u201cendless legal uncertainty\u201d and pledged a framework for platforms that integrate trading, lending, and staking under one license. Custody rules will also be updated to allow investors and intermediaries multiple options. \u2014 <em>Siamak Masnavi <\/em><a href=\"https:\/\/www.coindesk.com\/policy\/2025\/09\/13\/crypto-s-time-has-come-sec-chair-outlines-vision-for-on-chain-markets-and-agentic-finance\">Read more<\/a>.<\/li>\n<\/ul>\n<div style=\"display:none\">Unknown block type &#8220;divider&#8221;, specify a component for it in the `components.types` option<\/div>\n<h3><strong>Calendar<\/strong><\/h3>\n<ul>\n<li>Sept. 22-28: <a href=\"https:\/\/koreablockchainweek.com\/\">Korea Blockchain Week<\/a>, Seoul<\/li>\n<li>Oct. 1-2: <a href=\"https:\/\/www.token2049.com\/?ref=fintechlabs.com\">Token2049<\/a>, Singapore<\/li>\n<li>Oct. 13-15: <a href=\"https:\/\/blockworks.co\/event\/digital-asset-summit-2025-london\">Digital Asset Summit<\/a>, London<\/li>\n<li>Oct. 16-17: <a href=\"https:\/\/eblockchainconvention.com\/european-blockchain-convention-11\/?utm_term=digital%20asset%20summit&amp;utm_campaign=EBC10+-+Sales&amp;utm_source=adwords&amp;utm_medium=ppc&amp;hsa_acc=7795475099&amp;hsa_cam=22659648651&amp;hsa_grp=182504557604&amp;hsa_ad=757796101592&amp;hsa_src=g&amp;hsa_tgt=kwd-756664361403&amp;hsa_kw=digital%20asset%20summit&amp;hsa_mt=p&amp;hsa_net=adwords&amp;hsa_ver=3&amp;gad_source=1&amp;gad_campaignid=22659648651&amp;gbraid=0AAAAAC9Vgcv7kVMuyv2WsnlQO_HO0LVCM&amp;gclid=CjwKCAjw7fzDBhA7EiwAOqJkh2gtq80AObKLUiIUyrjD8D4ao26d7C6xEBz-WXUHM7ly_psif2sn7BoCNfIQAvD_BwE\">European Blockchain Convention<\/a>, Barcelona<\/li>\n<li>Nov. 17-22: <a href=\"https:\/\/devconnect.org\/\">Devconnect<\/a>, Buenos Aires<\/li>\n<li>Dec. 11-13: <a href=\"https:\/\/solana.com\/breakpoint\">Solana Breakpoint<\/a>, Abu Dhabi<\/li>\n<li>Feb. 10-12, 2026: <a href=\"https:\/\/consensus-hongkong.coindesk.com\/\">Consensus<\/a>, Hong Kong<\/li>\n<li>Mar. 30-Apr. 2: <a href=\"https:\/\/ethcc.io\/\">EthCC<\/a>, Cannes<\/li>\n<li>May 5-7, 2026: <a href=\"https:\/\/consensus.coindesk.com\/\">Consensus<\/a>, Miami<\/li>\n<\/ul>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Welcome to The Protocol, CoinDesk&#8217;s weekly wrap of the most important stories in cryptocurrency tech development. I\u2019m Margaux Nijkerk, a reporter at CoinDesk. In this issue: Ethereum Faces Validator Bottleneck With 2.5M ETH Awaiting Exit Is Ethereum\u2019s DeFi Future on L2s? Liquidity, Innovation Say Perhaps Yes Ethereum Foundation Starts New AI Team to Support Agentic [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":0,"footnotes":""},"categories":[2],"tags":[3,4,5],"class_list":["post-48073","post","type-post","status-publish","format-standard","hentry","category-news","tag-crypto","tag-doge","tag-news"],"_links":{"self":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/48073","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=48073"}],"version-history":[{"count":0,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/48073\/revisions"}],"wp:attachment":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48073"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48073"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48073"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}