After the Aptos ecosystem was silent for several months, a community proposal called AIP-119 injected new controversy and vitality into this Layer 1 public chain.
On April 18, Aptos community member moon shiesty initiated the Phase-by-Phase Reduction of Staking Rewards proposal AIP-119, suggesting that the staking reward rate be reduced from the current approximately 7% by 1% per month over the next three months, and the final annualized rate of return be reduced to 3.79%.
The proposal believes that reducing the staking reward rate will contribute to the long-term growth of the Aptos ecosystem, especially promoting more active competition in the DeFi field, and will also help enhance the token economics of APT to support its long-term sustainable development. As the first step in the reform of the Aptos economic model, the proposal will accept community feedback, and if the proposal is passed, a 6-month observation period will be set to evaluate the impact.
In the eyes of many observers, this is not only an adjustment in technical governance, but also an attempt to reconstruct the underlying logic of the Aptos economic model.
Hidden dangers of high returns and structural inflation
Aptos’ current staking yield ranks among the top in the L1 public chain, but the problems it brings are becoming increasingly prominent. Although the 7% risk-free annualized return has attracted a large number of users to lock APT to participate in staking, it has also caused serious inflationary pressure and inefficient use of funds.
The community generally believes that this model is constantly diluting the value of tokens and hindering the flow of ecological funds to more risky and innovative applications. As the initiator of the proposal said, the staking reward plays the role of central bank interest rate on the chain, and the interest rate at this moment may have deviated from the actual market.
In the past two years, although Aptos has attracted developers with its ultra-high performance and the security of the Move language, the activity of the ecosystem has never matched it. At the same time, Sui, which is also the Move twin star, continues to grow stronger, forming a sharp contrast.
Many community members attribute this to the structural problems of the Aptos token model - a high proportion of tokens are concentrated in the hands of the foundation and core nodes. Combined with the high staking returns set in the early days, the ecosystem funds are overly concentrated on passive income, which in turn inhibits constructive innovation.
Three things a new official does when he takes office
The proposal was made against the backdrop of a series of recent changes in the management and market positioning of Aptos. According to community sources, Aptos founder Mo Shaikh had a legal dispute with early members, and the final result was that Chinese Avery Ching took over as CEO of Aptos Labs (formerly CTO), and Mo Shaikh withdrew from daily management.
After he took office, Aptos strategic narrative also shifted from scalable L1 to next-generation global trading engine, and more clearly emphasized performance and trading experience as core competitiveness.
What is more remarkable is that Aptos has re-embraced the Chinese-speaking market: setting up the Chinese community MovemakerCN, hosting multiple hackathons and providing tens of millions of dollars in ecological funding, demonstrating its determination to rebuild community trust and expand the global developer network.
In terms of technology, Aptos is also constantly promoting performance optimizations such as Zaptos upgrades and Block-STM v2, hoping to attract developers in the new low-return, high-performance ecosystem to rebuild prosperity with PMF (product-market fit) driven by real needs as the core.
What does the community think?
Although the proposal of AIP-119 touched the pie of vested interests, the overall feedback from the community did not fall into emotional confrontation. On the contrary, opinions from multiple parties, including Amnis Finance, the largest liquid pledge agreement, showed a more rational review and feedback. Amnis pointed out in a public response that the current proposal direction is reasonable, but the execution pace is too aggressive and may damage the competitiveness of Aptos. They believe that the pledge yield is similar to the interest rate tool in emerging markets. For public chains like Aptos, high returns are the key to attracting capital.
If it drops to 3.79%, Aptos will be in the lowest yield tier in the L1 camp, which may cause funds to flow to higher-return options such as Solana or U.S. Treasuries. In addition, opponents worry that a sharp drop in returns will weaken retail investors motivation to lock positions, increase the market circulation of APT, and thus intensify selling pressure. The DeFi ecosystem may also face the risk of a decline in TVL due to the shrinking of leveraged staking strategies.
Regarding the verification nodes, opponents pointed out that the reduction in yields will significantly affect the profitability of small nodes. Taking the pledged amount of 1 million APT as an example, a 3.79% yield and a 7% commission only bring an annual income of about $13,000, while the operating costs may be as high as $72,000 to $96,000. This may force small nodes to withdraw and increase the centralization risk of the network. For this reason, the community validator support plan mentioned in the proposal has become the focus of attention, but the specific implementation plan has not yet been clarified.
Supporters emphasize that if Aptos wants to get out of the current predicament, it must give priority to solving the problems of inflation expectations and excessive token issuance. The credit illusion created by the high-yield staking mechanism is quietly eroding the foundation of the ecosystem. Each round of price rebound has become a shipping window for staking users, forming a price ceiling, which not only distorts market behavior, but also weakens the confidence of long-term holders.
What is more noteworthy is that the proposal puts forward a community staking support plan to try to support verification nodes with smaller staking amounts in addition to lowering interest rates to alleviate the risk of declining decentralization. Similar to the delegation support plans adopted by other L1s such as Solana, Aptos has also begun to face up to the delicate balance between its network security and decentralization.
The turning point of ecological evolution
The deeper meaning of AIP-119 is that Aptos has made active adjustments to its economic model and ecological mechanism in the face of cyclical market recessions, declining DeFi liquidity, and the high APY trap. In the current vicious cycle of issuance-staking-inflation of the L1 public chain, Aptos has become a rare attempt to actively compress basic income and release long-term potential.
This also triggered a deeper discussion: Does the healthy development of a chain have to be at the expense of risk-free interest rates? Is the logic of high APY = strong attraction failing? Real competitiveness comes from network utility and ecological sustainability, not short-term incentives. As Rui, a member of Hashkey Capital, pointed out, The basic yield of the verification node cannot be high. The yield can be increased by earning Mev money through LST, and more ownership of the network can be given to big users through DeFi and the ecosystem. Secondly, entry and exit are free (APT has set up Delegators Pool).
AIP-119 is still in the draft stage, but it may have become an important node for Aptos to get rid of its chronic illness and redefine its economic model. In this decision, Aptos chose not only to adjust the numbers, but also to re-verify the collective governance mechanism and publicly declare the value of long-termism.
Of course, while reducing the staking income, Aptos needs to provide a clearer and more attractive alternative incentive plan, otherwise short-term capital flight and loss of community trust will be inevitable. But at least, from cutting off ones own arm to reshaping the ecosystem, this chain has begun to try to answer the question that has been repeatedly raised but few projects have seriously faced: Why did we design this system?
As of writing, the APT token price is $5.58, up 5.5% in 24 hours; since April, the price of the currency has rebounded significantly compared to the market crash.
