diff --git a/tests/elabissues/typeclass_nested_validate.lean b/tests/elabissues/typeclass_nested_validate.lean
new file mode 100644
index 0000000000..ce8a073e88
--- /dev/null
+++ b/tests/elabissues/typeclass_nested_validate.lean
@@ -0,0 +1,65 @@
+/-
+This example demonstrates a case where Lean4's tabled typeclass resolution may loop.
+It also suggests a workaround, new instance binder semantics, new syntax support, and a new instance validation rule.
+-/
+
+class Field (K : Type) := (u : Unit)
+class VectorSpace (K : Type) [Field K] (E : Type) := (u : Unit)
+instance VectorSpaceSelf (K : Type) [Field K] : VectorSpace K K := {u:=()}
+class CompleteSpace (α : Type) := (u : Unit)
+def AlgebraicClosure (K : Type) [Field K] : Type := K
+
+/-
+Note that this instance is not a problem when `K` is known,
+because it will only ever "unpack" AlgebraicClosures, not create new ones
+However, if `K` is ever not known, it will create them ad infinitum!
+-/
+instance AlgebraicClosure.Field (K : Type) [Field K] : Field (AlgebraicClosure K) := {u:=()}
+
+/-
+Here is the "bad" instance one may be tempted to write:
+
+<<
+instance bad (K E : Type) [Field K] [VectorSpace K E] [CompleteSpace K] : CompleteSpace E := {u := ()}
+>>
+
+It is bad because typeclass resolution will try to find `Field ?K` before it knows what `?K` is,
+which in conjunction with the instance `AlgebraicClosure.Field`, will cause resolution to diverge.
+
+Here is the workaround, which is very ugly:
+
+<<
+instance veryUgly (K E : Type) {fK : Field K} [@VectorSpace K fK E] [CompleteSpace K] : CompleteSpace E := {u := ()}
+>>
+
+Here, `Field ?K` is not solved by typeclass resolution, and instead `VectorSpace ?K ?fK E` will be solved first instead.
+
+With the Lean3 instance semantics, one could make this less ugly by writing
+-/
+instance ugly (K E : Type) {_ : Field K} [VectorSpace K E] [CompleteSpace K] : CompleteSpace E := {u := ()}
+
+/-
+This would work because the `Field K` instance would still be considered for typeclass resolution even though it was not in a `[]` binder.
+However, the original plan for Lean4 was that one would only consider `[]` binders for typeclass resolution.
+We suggest that we revert to the Lean3 protocol instead, and consider any local variable with class type as a candidate instance.
+
+Finally, this instance could be made reasonable by allowing `{}` binders without names:
+<<
+instance reasonable (K E : Type) {Field K} [VectorSpace K E] [CompleteSpace K] : CompleteSpace E := {u := ()} -- should work in Lean4
+>>
+-/
+
+axiom K : Type
+instance K_Field : Field K := {u:=()}
+
+#synth CompleteSpace K -- should fail quickly (and in particular, not run forever)
+
+/-
+The bad instance above could trigger a validation warning:
+
+<<
+instance bad (K E : Type) [Field K] [VectorSpace K E] [CompleteSpace K] : CompleteSpace E := {u := ()}
+>>
+-- Warning: argument #3 is a class that occurs in downstream arguments and not the return type.
+-- You may want to replace [Field K] with {Field K} so typeclass resolution infers this instance after solving downstream instances.
+-/