After months of silence in the Aptos ecosystem, a community proposal named AIP-119 has injected new controversy and vitality into this Layer 1 public chain.
On April 18, Aptos community member moon shiesty initiated the proposal "AIP-119" to "phased reduction of staking reward rates," suggesting that the staking reward rate be reduced from the current approximately 7% by 1% each month over the next three months, ultimately lowering the annualized yield to 3.79%.
The proposal argues that lowering the staking reward rate will help the long-term growth of the Aptos ecosystem, particularly by promoting more active participation in competition within the DeFi space, while also enhancing 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 approved, will set a six-month observation period to assess the impact.
In the eyes of many observers, this is not just a technical governance adjustment but also an attempt to reconstruct the underlying logic of the Aptos economic model.
The Hidden Dangers of High Yields and Structural Inflation
Aptos's current staking yield ranks among the top in L1 public chains, but the problems it brings are becoming increasingly prominent. The 7% risk-free annual return has attracted a large number of users to lock APT for staking, but it has also caused severe inflationary pressure and inefficient use of funds.
The community generally believes that this model is continuously diluting token value and hindering the flow of ecosystem funds to more risky and innovative applications. As the proposal initiator metaphorically stated, staking rewards play the role of "central bank interest rates" on-chain, and the current "interest rate" may have deviated from the market reality.
Over the past two years, while Aptos has attracted developers with its high performance and the security of the Move language, the activity level of the ecosystem has not matched it. Meanwhile, Sui, also a "Move twin," has continued to strengthen, forming a stark contrast.
Many community members attribute this to structural issues in the Aptos token model— a high proportion of tokens concentrated in the hands of the foundation and core nodes, combined with the early set high staking yields, has led to an excessive concentration of ecosystem funds in "easy earnings," which in turn suppresses constructive innovation.
A New Official's Three Fires
The background of the proposal's initiation is a series of changes in Aptos's management and market positioning. According to community news, Aptos founder Mo Shaikh had legal disputes with early members, resulting in Chinese-American Avery Ching taking over as CEO of Aptos Labs (originally CTO), while Mo Shaikh exited daily management.
After his appointment, Aptos's strategic narrative shifted from "scalable L1" to "next-generation global trading engine," with a clearer emphasis on performance and trading experience as core competitive advantages.
More significantly, Aptos has re-embraced the Chinese-speaking market: establishing the Chinese community MovemakerCN, hosting multiple hackathons, and providing ecosystem funding at the level of tens of millions of dollars, demonstrating its determination to rebuild community trust and expand its global developer network.
Technically, Aptos is also continuously advancing the Zaptos upgrade and performance optimizations like Block-STM v2, hoping to attract developers in a "low yield, high performance" new ecosystem driven by real demand for PMF (product-market fit) to rebuild prosperity.
What Does the Community Think?
Although the proposal AIP-119 touches the cake of vested interests, the overall community feedback has not fallen into emotional confrontation. On the contrary, multiple opinions, including from the largest liquid staking protocol Amnis Finance, have shown a more rational examination and feedback. Amnis pointed out in a public response that the current proposal direction is reasonable, but the execution pace is too aggressive, which may harm Aptos's competitiveness. They believe that the staking yield is similar to interest rate tools in emerging markets, and for a public chain like Aptos, high yields are key to attracting capital.
If reduced to 3.79%, Aptos would be in the lowest yield tier among L1 chains, potentially leading to a flow of funds to higher-return options like Solana or U.S. Treasury bonds. Additionally, opponents worry that a sudden drop in yields will weaken retail investors' motivation to lock up their assets, increasing the market circulation of APT and thereby intensifying selling pressure. The DeFi ecosystem may also face the risk of declining TVL due to the shrinkage of leveraged staking strategies.
Regarding validator nodes, opponents point out that the reduction in yield will significantly impact the profitability of small nodes. For example, with a staking amount of 1 million APT, a yield of 3.79% and a 7% commission would only bring in about $13,000 in annual income, while operating costs could be as high as $72,000 to $96,000. This could force small nodes to exit, exacerbating the risk of network centralization. Consequently, the community validator support plan mentioned in the proposal has become a focal point, but specific implementation plans have yet to be clarified.
Supporters emphasize that for Aptos to emerge from its current predicament, it must prioritize addressing inflation expectations and the issue of token overissuance. The "credit illusion" created by the high-yield staking mechanism is quietly eroding the foundation of the ecosystem. Each price rebound has become a "liquidation window" for staking users, forming a price ceiling that not only distorts market behavior but also undermines the confidence of long-term holders.
More importantly, the proposal has introduced a "community staking support plan," attempting to support smaller validator nodes while lowering interest rates, alleviating the risk of declining decentralization. Similar to the delegated support plans adopted by other L1s like Solana, Aptos is also beginning to confront the delicate balance between its network security and decentralization.
A Turning Point in Ecological Evolution
The deeper significance of AIP-119 is Aptos's proactive adjustment of its economic model and ecological mechanisms in the face of market cyclical downturns, declining DeFi liquidity, and the "high APY trap." In the current vicious cycle of "increased issuance - staking - inflation" prevalent among L1 public chains, Aptos stands out as a rare attempt to actively compress base yields and release long-term potential.
This has also sparked deeper discussions: must the healthy development of a chain come at the cost of sacrificing risk-free rates? Is the logic of "high APY = strong attraction" becoming ineffective? True competitiveness comes from network utility and ecological sustainability, rather than short-term incentives. As Rui from Hashkey Capital pointed out, "the base yield for validator nodes cannot be high; increase yield by earning Mev through LST, and give large holders more ownership of the network through DeFi and ecology, and finally allow for free entry and exit (APT has set up a Delegators Pool)."
AIP-119 is still in the draft stage, but it may have become an important node for Aptos to shed its chronic issues and redefine its economic model. In this decision, Aptos is choosing not just a numerical adjustment but also a revalidation of its collective governance mechanism and a public declaration of the value of "long-termism."
Of course, while lowering staking yields, Aptos needs to provide clearer and more attractive alternative incentive schemes; otherwise, short-term capital flight and loss of community trust will be inevitable. But at least, from "self-inflicted harm" to "restructuring the ecosystem," this chain is beginning to attempt to answer the question that has been repeatedly raised but seldom faced seriously by projects: what exactly are we designing this system for?
As of the time of writing, the price of the APT token is $5.58, up 5.5% in 24 hours; since April, the price has rebounded significantly from the market's sharp decline.
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