diff --git a/apps/omg_db/lib/db.ex b/apps/omg_db/lib/db.ex
index 094d86a8a8..5bd44484b9 100644
--- a/apps/omg_db/lib/db.ex
+++ b/apps/omg_db/lib/db.ex
@@ -143,6 +143,7 @@ defmodule OMG.DB do
       :last_exit_finalizer_eth_height,
       :last_exit_challenger_eth_height,
       :last_in_flight_exit_processor_eth_height,
+      :last_ife_exit_deleted_eth_height,
       :last_piggyback_processor_eth_height,
       :last_competitor_processor_eth_height,
       :last_challenges_responds_processor_eth_height,
diff --git a/apps/omg_eth/lib/omg_eth/root_chain/abi.ex b/apps/omg_eth/lib/omg_eth/root_chain/abi.ex
index 5cdbb18afb..b1c71b9638 100644
--- a/apps/omg_eth/lib/omg_eth/root_chain/abi.ex
+++ b/apps/omg_eth/lib/omg_eth/root_chain/abi.ex
@@ -13,7 +13,7 @@
 # limitations under the License.
 defmodule OMG.Eth.RootChain.Abi do
   @moduledoc """
-  Functions that provide ethereum log decoding 
+  Functions that provide ethereum log decoding
   """
   alias OMG.Eth.Encoding
   alias OMG.Eth.RootChain.AbiEventSelector
diff --git a/apps/omg_eth/lib/omg_eth/root_chain/abi_event_selector.ex b/apps/omg_eth/lib/omg_eth/root_chain/abi_event_selector.ex
index 146fd68bb5..e6a7e9dca7 100644
--- a/apps/omg_eth/lib/omg_eth/root_chain/abi_event_selector.ex
+++ b/apps/omg_eth/lib/omg_eth/root_chain/abi_event_selector.ex
@@ -45,6 +45,19 @@ defmodule OMG.Eth.RootChain.AbiEventSelector do
     }
   end
 
+  @spec in_flight_exit_deleted() :: ABI.FunctionSelector.t()
+  def in_flight_exit_deleted() do
+    %ABI.FunctionSelector{
+      function: "InFlightExitDeleted",
+      input_names: ["exitId"],
+      inputs_indexed: [true],
+      method_id: <<25, 145, 196, 195>>,
+      returns: [],
+      type: :event,
+      types: [uint: 160]
+    }
+  end
+
   @spec in_flight_exit_challenged() :: ABI.FunctionSelector.t()
   def in_flight_exit_challenged() do
     %ABI.FunctionSelector{
diff --git a/apps/omg_eth/lib/omg_eth/root_chain/fields.ex b/apps/omg_eth/lib/omg_eth/root_chain/fields.ex
index 93402ed429..b6650b301c 100644
--- a/apps/omg_eth/lib/omg_eth/root_chain/fields.ex
+++ b/apps/omg_eth/lib/omg_eth/root_chain/fields.ex
@@ -75,6 +75,11 @@ defmodule OMG.Eth.RootChain.Fields do
     reduce_naming(data, contracts_naming)
   end
 
+  def rename(data, %ABI.FunctionSelector{function: "InFlightExitDeleted"}) do
+    contracts_naming = [{"exitId", :exit_id}]
+    reduce_naming(data, contracts_naming)
+  end
+
   def rename(data, %ABI.FunctionSelector{function: "InFlightExitChallenged"}) do
     contracts_naming = [
       {"challenger", :challenger},
diff --git a/apps/omg_eth/test/omg_eth/root_chain/abi_test.exs b/apps/omg_eth/test/omg_eth/root_chain/abi_test.exs
index daff1b809f..7222875d34 100644
--- a/apps/omg_eth/test/omg_eth/root_chain/abi_test.exs
+++ b/apps/omg_eth/test/omg_eth/root_chain/abi_test.exs
@@ -503,8 +503,36 @@ defmodule OMG.Eth.RootChain.AbiTest do
            }
   end
 
-  test "if in flight exit finalized can be decoded" do
-    in_flight_exit_finalized_log = %{
+  test "if in flight exit deleted can be decoded" do
+    in_flight_exit_deleted_log = %{
+      :event_signature => "InFlightExitDeleted(uint160)",
+      "address" => "0x92ce4d7773c57d96210c46a07b89acf725057f21",
+      "blockHash" => "0xcafbc4b710c5fab8f3d719f65053637407231ecde31a859f1709e3478a2eda54",
+      "blockNumber" => "0x14a",
+      "data" => "0x",
+      "logIndex" => "0x2",
+      "removed" => false,
+      "topics" => [
+        "0x1991c4c350498b0cc937c6a08bc5bdecf2e4fdd9d918052a880f102e43dbe45c",
+        "0x000000000000000000000000003fd275046f2823936fd97c1e3c8b225464d7f1"
+      ],
+      "transactionHash" => "0xbe310ade41278c5607620311b79363aa520ac46c7ba754bf3027d501c5a95f40",
+      "transactionIndex" => "0x0"
+    }
+
+    assert Abi.decode_log(in_flight_exit_deleted_log) == %{
+             eth_height: 330,
+             event_signature: "InFlightExitDeleted(uint160)",
+             exit_id: 1_423_280_346_484_099_708_949_144_162_169_101_241_792_387_057,
+             log_index: 2,
+             root_chain_txhash:
+               <<190, 49, 10, 222, 65, 39, 140, 86, 7, 98, 3, 17, 183, 147, 99, 170, 82, 10, 196, 108, 123, 167, 84,
+                 191, 48, 39, 213, 1, 197, 169, 95, 64>>
+           }
+  end
+
+  test "if in flight exit output withdrawn can be decoded" do
+    in_flight_exit_output_withdrawn_log = %{
       :event_signature => "InFlightExitOutputWithdrawn(uint160,uint16)",
       "address" => "0x92ce4d7773c57d96210c46a07b89acf725057f21",
       "blockHash" => "0x2218cd9358fd6ed3b720b512b645a88a9a3ed9f472e6192fae202f60e40ac7a2",
@@ -520,7 +548,7 @@ defmodule OMG.Eth.RootChain.AbiTest do
       "transactionIndex" => "0x0"
     }
 
-    assert Abi.decode_log(in_flight_exit_finalized_log) == %{
+    assert Abi.decode_log(in_flight_exit_output_withdrawn_log) == %{
              eth_height: 335,
              event_signature: "InFlightExitOutputWithdrawn(uint160,uint16)",
              in_flight_exit_id: 3_853_567_223_408_339_354_111_409_210_931_346_801_537_991_844,
diff --git a/apps/omg_watcher/lib/omg_watcher/coordinator_setup.ex b/apps/omg_watcher/lib/omg_watcher/coordinator_setup.ex
index 5d2aea1acb..170a0ac10f 100644
--- a/apps/omg_watcher/lib/omg_watcher/coordinator_setup.ex
+++ b/apps/omg_watcher/lib/omg_watcher/coordinator_setup.ex
@@ -52,6 +52,7 @@ defmodule OMG.Watcher.CoordinatorSetup do
        ],
        exit_challenger: [waits_for: :exit_processor, finality_margin: finality_margin],
        in_flight_exit_processor: [waits_for: :depositor, finality_margin: finality_margin],
+       in_flight_exit_deleted_processor: [waits_for: :in_flight_exit_processor, finality_margin: finality_margin],
        piggyback_processor: [waits_for: :in_flight_exit_processor, finality_margin: finality_margin],
        competitor_processor: [waits_for: :in_flight_exit_processor, finality_margin: finality_margin],
        challenges_responds_processor: [waits_for: :competitor_processor, finality_margin: finality_margin],
diff --git a/apps/omg_watcher/lib/omg_watcher/ethereum_event_aggregator.ex b/apps/omg_watcher/lib/omg_watcher/ethereum_event_aggregator.ex
index a68bf0b23b..d4be5f2594 100644
--- a/apps/omg_watcher/lib/omg_watcher/ethereum_event_aggregator.ex
+++ b/apps/omg_watcher/lib/omg_watcher/ethereum_event_aggregator.ex
@@ -14,7 +14,7 @@
 defmodule OMG.Watcher.EthereumEventAggregator do
   @moduledoc """
   This process combines all plasma contract events we're interested in and does eth_getLogs + enriches them if needed
-  for all Ethereum Event Listener processes. 
+  for all Ethereum Event Listener processes.
   """
   use GenServer
   require Logger
@@ -52,6 +52,11 @@ defmodule OMG.Watcher.EthereumEventAggregator do
     forward_call(server, :in_flight_exit_started, from_block, to_block, @timeout)
   end
 
+  @spec in_flight_exit_deleted(GenServer.server(), pos_integer(), pos_integer()) :: result()
+  def in_flight_exit_deleted(server \\ __MODULE__, from_block, to_block) do
+    forward_call(server, :in_flight_exit_deleted, from_block, to_block, @timeout)
+  end
+
   @spec in_flight_exit_piggybacked(GenServer.server(), pos_integer(), pos_integer()) :: result()
   def in_flight_exit_piggybacked(server \\ __MODULE__, from_block, to_block) do
     # input and output
diff --git a/apps/omg_watcher/lib/omg_watcher/exit_processor.ex b/apps/omg_watcher/lib/omg_watcher/exit_processor.ex
index 83b865db37..1593433412 100644
--- a/apps/omg_watcher/lib/omg_watcher/exit_processor.ex
+++ b/apps/omg_watcher/lib/omg_watcher/exit_processor.ex
@@ -79,6 +79,18 @@ defmodule OMG.Watcher.ExitProcessor do
     GenServer.call(__MODULE__, {:new_in_flight_exits, in_flight_exit_started_events}, @timeout)
   end
 
+  @doc """
+  Accepts events and processes them in the state - new in flight exits are tracked.
+
+  Returns `db_updates` to be sent to `OMG.DB` by the caller
+  """
+  # empty list clause to not block the server for no-ops
+  def delete_in_flight_exits([]), do: {:ok, []}
+
+  def delete_in_flight_exits(in_flight_exit_deleted_events) do
+    GenServer.call(__MODULE__, {:in_flight_exits_deleted, in_flight_exit_deleted_events}, @timeout)
+  end
+
   @doc """
   Accepts events and processes them in the state - finalized exits are untracked _if valid_ otherwise raises alert
 
@@ -359,6 +371,22 @@ defmodule OMG.Watcher.ExitProcessor do
     {:reply, {:ok, db_updates}, new_state}
   end
 
+  @doc """
+  See `delete_in_flight_exits/1`. Flow:
+  - spends input utxos
+  - deletes in-flight exits from state
+  """
+  def handle_call({:delete_in_flight_exits, deletions}, _from, state) do
+    _ =
+      if not Enum.empty?(deletions),
+        do: Logger.info("Recognized #{Enum.count(deletions)} deletions: #{inspect(deletions)}")
+
+    {new_state, deleted_utxos, db_updates} = Core.delete_in_flight_exits(state, deletions)
+    {:ok, db_updates_from_state, _validities} = State.exit_utxos(deleted_utxos)
+
+    {:reply, {:ok, db_updates ++ db_updates_from_state}, new_state}
+  end
+
   @doc """
   See `finalize_exits/1`. Flow:
 
diff --git a/apps/omg_watcher/lib/omg_watcher/exit_processor/core.ex b/apps/omg_watcher/lib/omg_watcher/exit_processor/core.ex
index 65bbfc6619..d8c0240148 100644
--- a/apps/omg_watcher/lib/omg_watcher/exit_processor/core.ex
+++ b/apps/omg_watcher/lib/omg_watcher/exit_processor/core.ex
@@ -641,4 +641,32 @@ defmodule OMG.Watcher.ExitProcessor.Core do
 
   defp sla_margin_safe?(exit_processor_sla_margin, min_exit_period_seconds, ethereum_block_time_seconds),
     do: exit_processor_sla_margin * ethereum_block_time_seconds < min_exit_period_seconds
+
+  @doc """
+  Deletes in-flight exits from state and returns deleted exits
+  """
+  @spec delete_in_flight_exits(__MODULE__.t(), list(map)) :: {__MODULE__.t(), list(InFlightExitInfo.t()), list(any())}
+  def delete_in_flight_exits(state, deletions) do
+    exit_ids =
+      deletions
+      |> Enum.map(fn %{exit_id: exit_id} -> InFlightExitInfo.to_contract_id(exit_id) end)
+      |> MapSet.new()
+
+    deleted_ifes_by_key =
+      state.in_flight_exits
+      |> Enum.filter(fn {_, ife} -> MapSet.member?(exit_ids, ife.contract_id) end)
+      |> Map.new()
+
+    deleted_keys = Map.keys(deleted_ifes_by_key)
+    updated_ifes = Map.drop(state.in_flight_exits, deleted_keys)
+
+    deleted_utxos =
+      deleted_ifes_by_key
+      |> Map.values()
+      |> InFlightExitInfo.get_input_utxos()
+
+    db_updates = Enum.map(deleted_keys, fn key -> {:delete, :in_flight_exit_info, key} end)
+
+    {%{state | in_flight_exits: updated_ifes}, deleted_utxos, db_updates}
+  end
 end
diff --git a/apps/omg_watcher/lib/omg_watcher/exit_processor/in_flight_exit_info.ex b/apps/omg_watcher/lib/omg_watcher/exit_processor/in_flight_exit_info.ex
index 886a23f150..bd5db6bc36 100644
--- a/apps/omg_watcher/lib/omg_watcher/exit_processor/in_flight_exit_info.ex
+++ b/apps/omg_watcher/lib/omg_watcher/exit_processor/in_flight_exit_info.ex
@@ -193,6 +193,16 @@ defmodule OMG.Watcher.ExitProcessor.InFlightExitInfo do
     {:put, :in_flight_exit_info, {ife_hash, value}}
   end
 
+  @doc """
+  Returns all input utxos for given in-flight exits
+  """
+  @spec get_input_utxos(list(t())) :: list(Utxo.Position.t())
+  def get_input_utxos(in_flight_exits) do
+    in_flight_exits
+    |> Enum.map(& &1.input_utxos_pos)
+    |> List.flatten()
+  end
+
   defp assert_utxo_pos_type(Utxo.position(blknum, txindex, oindex))
        when is_integer(blknum) and is_integer(txindex) and is_integer(oindex),
        do: :ok
@@ -417,6 +427,12 @@ defmodule OMG.Watcher.ExitProcessor.InFlightExitInfo do
       }),
       do: is_older?(seen_in_pos, oldest_competitor_pos)
 
+  @doc """
+  Converts integer to in-flight exit contract id
+  """
+  @spec to_contract_id(non_neg_integer) :: <<_::192>>
+  def to_contract_id(id), do: <<id::192>>
+
   @doc """
   Checks if the competitor being seen at `competitor_pos` (`nil` if unseen) is viable to challenge with, considering the
   current state of the IFE - that is, only if it is older than IFE tx's inclusion and other competitors
diff --git a/apps/omg_watcher/lib/omg_watcher/sync_supervisor.ex b/apps/omg_watcher/lib/omg_watcher/sync_supervisor.ex
index 5920227b63..9397d20297 100644
--- a/apps/omg_watcher/lib/omg_watcher/sync_supervisor.ex
+++ b/apps/omg_watcher/lib/omg_watcher/sync_supervisor.ex
@@ -114,6 +114,7 @@ defmodule OMG.Watcher.SyncSupervisor do
          [name: :exit_finalized, enrich: false],
          [name: :exit_challenged, enrich: false],
          [name: :in_flight_exit_started, enrich: true],
+         [name: :in_flight_exit_deleted, enrich: false],
          [name: :in_flight_exit_input_piggybacked, enrich: false],
          [name: :in_flight_exit_output_piggybacked, enrich: false],
          [name: :in_flight_exit_challenged, enrich: true],
@@ -213,6 +214,15 @@ defmodule OMG.Watcher.SyncSupervisor do
         get_events_callback: &EthereumEventAggregator.in_flight_exit_withdrawn/2,
         process_events_callback: &Watcher.ExitProcessor.finalize_in_flight_exits/1
       ),
+      EthereumEventListener.prepare_child(
+        metrics_collection_interval: metrics_collection_interval,
+        ethereum_events_check_interval_ms: ethereum_events_check_interval_ms,
+        contract_deployment_height: contract_deployment_height,
+        service_name: :in_flight_exit_deleted_processor,
+        synced_height_update_key: :last_ife_exit_deleted_eth_height,
+        get_events_callback: &EthereumEventAggregator.in_flight_exit_deleted/2,
+        process_events_callback: &Watcher.ExitProcessor.delete_in_flight_exits/1
+      ),
       {StatusCache, [event_bus: OMG.Bus, ets: status_cache()]},
       {ChildManager, [monitor: Monitor]}
     ]
diff --git a/apps/omg_watcher/test/omg_watcher/exit_processor/core/state_interaction_test.exs b/apps/omg_watcher/test/omg_watcher/exit_processor/core/state_interaction_test.exs
index 2eb35b4dec..aaafd75688 100644
--- a/apps/omg_watcher/test/omg_watcher/exit_processor/core/state_interaction_test.exs
+++ b/apps/omg_watcher/test/omg_watcher/exit_processor/core/state_interaction_test.exs
@@ -289,6 +289,23 @@ defmodule OMG.Watcher.ExitProcessor.Core.StateInteractionTest do
     assert [_] = Core.get_active_in_flight_exits(processor)
   end
 
+  test "deleting in-flight exits works with State",
+       %{processor_empty: processor, state_empty: state, alice: alice} do
+    ife_exit_tx = TestHelper.create_recovered([{1, 0, 0, alice}], @eth, [{alice, 9}])
+    ife_id = 1
+
+    state = TestHelper.do_deposit(state, alice, %{amount: 10, currency: @eth, blknum: 1})
+    {:ok, _, state} = State.Core.form_block(state)
+
+    {_processor, deleted_utxos, _db_updates} =
+      processor
+      |> start_ife_from(ife_exit_tx, exit_id: ife_id)
+      |> Core.delete_in_flight_exits([%{exit_id: ife_id}])
+
+    assert {:ok, {[{:delete, :utxo, _}], {[{:utxo_position, 1, 0, 0}], []}}, _} =
+             State.Core.exit_utxos(deleted_utxos, state)
+  end
+
   defp mock_utxo_exists(%ExitProcessor.Request{utxos_to_check: positions} = request, state) do
     %{request | utxo_exists_result: positions |> Enum.map(&State.Core.utxo_exists?(&1, state))}
   end
diff --git a/apps/omg_watcher/test/omg_watcher/exit_processor/core_test.exs b/apps/omg_watcher/test/omg_watcher/exit_processor/core_test.exs
index d9451bbf8c..2fd9fda0d5 100644
--- a/apps/omg_watcher/test/omg_watcher/exit_processor/core_test.exs
+++ b/apps/omg_watcher/test/omg_watcher/exit_processor/core_test.exs
@@ -335,4 +335,42 @@ defmodule OMG.Watcher.ExitProcessor.CoreTest do
       db_value_map
     end
   end
+
+  describe "delete_in_flight_exits/2" do
+    test "returns deleted utxos and database updates", %{processor_empty: processor, alice: alice} do
+      ife_exit_tx1 = TestHelper.create_recovered([{1, 0, 0, alice}], @eth, [{alice, 9}])
+      ife_id1 = 1
+      tx_hash1 = Transaction.raw_txhash(ife_exit_tx1)
+      ife_exit_tx2 = TestHelper.create_recovered([{2, 0, 1, alice}, {2, 0, 2, alice}], @eth, [{alice, 9}])
+      ife_id2 = 2
+      ife_exit_tx3 = TestHelper.create_recovered([{3, 0, 1, alice}, {3, 0, 2, alice}], @eth, [{alice, 9}])
+      ife_id3 = 3
+      tx_hash3 = Transaction.raw_txhash(ife_exit_tx3)
+
+      {_processor, deleted_utxos, db_updates} =
+        processor
+        |> start_ife_from(ife_exit_tx1, exit_id: ife_id1)
+        |> start_ife_from(ife_exit_tx2, exit_id: ife_id2)
+        |> start_ife_from(ife_exit_tx3, exit_id: ife_id3)
+        |> Core.delete_in_flight_exits([%{exit_id: ife_id1}, %{exit_id: ife_id3}])
+
+      assert Enum.sort(deleted_utxos) ==
+               Enum.sort([{:utxo_position, 3, 0, 1}, {:utxo_position, 3, 0, 2}, {:utxo_position, 1, 0, 0}])
+
+      assert Enum.sort(db_updates) ==
+               Enum.sort([{:delete, :in_flight_exit_info, tx_hash1}, {:delete, :in_flight_exit_info, tx_hash3}])
+    end
+
+    test "deletes in-flight exits from processor", %{processor_empty: processor, alice: alice} do
+      ife_exit_tx = TestHelper.create_recovered([{1, 0, 0, alice}], @eth, [{alice, 9}])
+      ife_id = 1
+
+      {processor, _deleted_utxos, _db_updates} =
+        processor
+        |> start_ife_from(ife_exit_tx, exit_id: ife_id)
+        |> Core.delete_in_flight_exits([%{exit_id: ife_id}])
+
+      assert Enum.empty?(processor.in_flight_exits)
+    end
+  end
 end
diff --git a/apps/omg_watcher/test/omg_watcher/exit_processor/in_flight_exit_info_test.exs b/apps/omg_watcher/test/omg_watcher/exit_processor/in_flight_exit_info_test.exs
new file mode 100644
index 0000000000..f1111674cd
--- /dev/null
+++ b/apps/omg_watcher/test/omg_watcher/exit_processor/in_flight_exit_info_test.exs
@@ -0,0 +1,63 @@
+# Copyright 2019-2020 OmiseGO Pte Ltd
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#     http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+defmodule OMG.Watcher.ExitProcessor.InFlightExitInfoTest do
+  @moduledoc false
+
+  use OMG.Watcher.ExitProcessor.Case, async: true
+
+  alias OMG.State.Transaction
+  alias OMG.Utxo.Position
+  alias OMG.Watcher.ExitProcessor.InFlightExitInfo
+
+  @eth OMG.Eth.zero_address()
+
+  describe "get_input_utxos/1" do
+    test "returns a list of input utxos" do
+      inputs1 = [
+        Position.encode({:utxo_position, 1, 0, 0}),
+        Position.encode({:utxo_position, 1, 0, 1})
+      ]
+
+      inputs2 = [Position.encode({:utxo_position, 1, 0, 2})]
+
+      ife_infos = [
+        ife_info_with_inputs(inputs1),
+        ife_info_with_inputs(inputs2)
+      ]
+
+      expected = inputs1 ++ inputs2
+
+      assert InFlightExitInfo.get_input_utxos(ife_infos) == expected
+    end
+  end
+
+  defp ife_info_with_inputs(inputs) do
+    tx =
+      Transaction.Payment.new(
+        [{1, 0, 0}],
+        [{"alice", @eth, 1}, {"alice", @eth, 2}],
+        <<0::256>>
+      )
+
+    %InFlightExitInfo{
+      tx: %Transaction.Signed{raw_tx: tx, sigs: <<1::520>>},
+      timestamp: 1,
+      contract_id: <<1::160>>,
+      eth_height: 1,
+      is_active: true,
+      input_utxos_pos: inputs
+    }
+  end
+end
diff --git a/priv/cabbage b/priv/cabbage
index 96d67f4e06..cd262a3b62 160000
--- a/priv/cabbage
+++ b/priv/cabbage
@@ -1 +1 @@
-Subproject commit 96d67f4e065aad020dfde111419e95e397f443e8
+Subproject commit cd262a3b624a347b05208b154e0c2d7f85dd92a9