Ethereum network bounces back as 60% validators go offline and first inactivity leak occurs

The Ethereum network faced an unprecedented event on May 11 and 12, as over 60% of validators stopped performing their duties, causing 253 blocks to miss their proposal deadlines. Despite transactions still being processed, this marked the first occurrence of a mysterious "inactivity leak.

Timeline of Ethereum

The Ethereum price breakdown from monthly support of $1827 indicates this altcoin is poised for a longer correction. However, the falling price witnessed significant demand pressure near the 100-day EMA at $1766, indicating the buyers have not thrown the towel yet.

The Ethereum network has faced transaction finality challenges twice in the past week, with the Beacon chain experiencing difficulties finalizing blocks on May 11 and May 12, 2023. The first incident lasted for 25 minutes, while the second persisted for over an hour.

On Friday, Ethereum's Beacon chain encountered yet another bout of transaction finality challenges, reminiscent of the glitch experienced on May 11, 2023. For over an hour, the blockchain stopped the process of finalizing blocks.

Yesterday, Ethereum (ETH), the second largest blockchain and the main smart contract platform, went through two incidents with block finality. It recovered promptly, and the network was online during the whole period of issues, developers say.

Ethereum consensus clients Prysm and Teku released new updates to fix the recent Beacon Chain finality issues. The Ethereum network suffered from finality issues two times within 24 hours, first for 25 mins and the second time for over an hour.

A widely followed crypto analyst and trader believes Ethereum (ETH) could rally to levels last witnessed about a year ago. Pseudonymous crypto analyst Kaleo tells his 586,700 Twitter followers that Ethereum could surge to $2,400, a level last reached in May of 2022 before the Terra (LUNA) ecosystem collapsed.

The market for liquid staking derivatives has witnessed a surge, with over 440,000 Ethereum added in just two weeks. This trend reflects the growing interest in unlocking the potential of staked Ethereum while meeting investor demand for liquidity and yield.

In 2022, Ethereum formally adopted Proof of Stake (PoS) as a more secure and energy-efficient method to validate transactions and add new blocks to the blockchain. PoS and other consensus mechanisms are integral to the security of a network.

In less than two weeks, the total value locked (TVL) in liquid staking derivatives has increased by 441,110 ether, worth roughly $793 million. While Lido Finance dominates the market with 74.

On-chain data shows the Ethereum exchange supply has declined to an all-time low recently, suggesting that investors may be accumulating. Ethereum Supply On Exchanges Has Continued Its Downtrend Recently According to data from the on-chain analytics firm Santiment, ETH on exchanges is now at its lowest since the cryptocurrency started trading publicly in July 2015.