Key Points
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Many investors stake their Ethereum to generate some additional yield on their capital.
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A lot of capital is in the midst of being unstaked right now.
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That could be a pessimistic sign about how secure investors consider their staked holdings to be.
In early May, the queue of investors waiting to unstake their Ethereum (CRYPTO: ETH) exploded by roughly 72,000% in about two weeks, swelling to reach 352,136 ETH as of May 5. The unstaking process now takes around six days after entering the queue, but the more important factor is that this kind of spike in the size of the queue sounds so abnormal as to be potentially worrying.
So is this a big red flag for Ethereum, or is there a benign explanation?
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An investor looks in consternation at a page in a book while sitting at a desk.
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The recent wave of hacks is triggering a rush for the exit
There’s one big underlying reason why people want to unstake their Ethereum.
April 2026 was the worst month for decentralized finance (DeFi) exploits on record, with roughly $625 million in capital stolen across 30 separate incidents, many of them associated with a North Korean hacking group. The largest compromise was the KelpDAO bridge exploit on April 18, which drained approximately $292 million and also triggered a chain reaction that pulled more than $10 billion from lending protocol Aave within days. Ethereum’s DeFi total value locked (TVL), a measure of the capital parked in these protocols, has dropped from $53.5 billion on April 5 to $46 billion today.
The exit queue spiking is one consequence of investors panicking and pulling their capital from anything touching DeFi. Staking — the process of locking up Ethereum to help validate network transactions in exchange for yield — requires entering a line to get out. When enough holders simultaneously decide to make their ETH liquid, the queue balloons.
But some investors unstaking some ETH does not mean that it’s time to sell your holdings. Many holders are simply moving coins from a locked-up state to a liquid one as a precaution. And staking Ethereum only yields about 2.8% annually, so the yield doesn’t make for much of a barrier to exiting.
There’s a bigger story here
As concerning as the DeFi hacks are, especially when considering that Ethereum’s DeFi value is tangibly lower than before, there’s also a counternarrative worth paying attention to.
The entry queue — ETH waiting to begin staking and earning yield on the network — holds about 3.6 million ETH with an estimated 62-day backlog. Even with the ongoing security concerns, there’s still a lot more capital that wants to be staked in Ethereum’s ecosystem than the capital that wants to leave. So there’s no real red flag here, at least not unless the entry queue starts to shrink quickly while the exit queue is growing fast.
That said, the frequency of DeFi exploits is not something to wave away. If hacks continue at April’s pace, it’ll erode even more trust in the broader ecosystem surrounding Ethereum, even though the core protocol hasn’t been compromised. For investors holding ETH through an exchange-traded fund (ETF) or an exchange, your coins aren’t at direct risk from these DeFi-specific vulnerabilities.
Watch whether exploit numbers decline in the months ahead; if they do, this unstaking spike will look a lot like the ones that came before it and quickly fade away.
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Alex Carchidi has positions in Ethereum. The Motley Fool has positions in and recommends Aave and Ethereum. The Motley Fool has a disclosure policy.
