The Ethereum Foundation is pulling roughly 21,270 ETH, worth approximately $49.6 million, out of Lido Finance. The move, first detected by Arkham Intelligence on April 26, represents one of the clearest signals yet that Ethereum’s stewards are rethinking their relationship with third-party staking protocols.
As of May 11, the assets remain stuck in Lido’s withdrawal queue.
What’s actually happening
The withdrawal involved depositing wrapped stETH into Lido’s unstaking contract, converting its Lido staking receipts back into plain ETH, a process that takes time due to Lido’s withdrawal queue mechanics.
In April, the Ethereum Foundation staked 70,000 ETH, valued at roughly $166 million, directly on its own validators. That’s more than triple the amount being pulled from Lido.
There’s also been activity on the selling front. The Foundation executed over-the-counter sales to Bitmine totaling $47 million by May 1, with $24 million of that sold on April 24 alone.
The Lido problem
Lido controls approximately 22.8% of all staked ETH, making it the single largest staking entity on the network. When one protocol controls nearly a quarter of all staked ETH, it creates a concentration risk that cuts against Ethereum’s core ethos of decentralization.
Lido’s revenue has dropped 23% year-over-year, a decline that persists despite the protocol slashing its fees from 10% to 5%. The governance token, LDO, has fallen to $0.37, down from over $0.50 just three months ago.
Why investors should pay attention
The Foundation has already demonstrated a willingness to sell ETH through OTC deals with Bitmine. If the 21,270 ETH currently in Lido’s withdrawal queue eventually makes its way to market, that’s nearly $50 million in potential sell-side liquidity.
Staked ETH withdrawals have been possible since the Shanghai Upgrade in April 2023. The Foundation’s decision to self-stake 70,000 ETH while exiting Lido suggests a philosophical shift toward validator decentralization.
Traders should monitor how quickly the 21,270 ETH clears Lido’s withdrawal queue and, more importantly, what the Foundation does with it once it’s liquid. Another OTC sale to Bitmine would signal continued portfolio drawdowns. Restaking on Foundation-operated validators would confirm the decentralization thesis.