The proverb about building in a down market for cryptocurrencies has in many respects been true for Aptos.
It diverted attention away from the blockchain’s tokenomics, which came under fire for being announced the day after its mainnet launch in October. Twitter users frequently argued that Aptos should have released information about the distribution of its native APT coin sooner after obtaining $350 million at a valuation of more than $4 billion.
The Aptos Foundation is now contemplating a network upgrade and reviewing its tokenomics with the aim of giving greater transparency following months of holding hackathons and establishing partnerships.
The CEO of Aptos, Mo Shaikh, said in an interview with Decrypt that the company would “give a little more clarity and more information behind the concepts, and how we came to the choice that we took.” But a lot of it ultimately comes down to considering the people, so we’ll have a really extensive paper that will eventually go live.
Tokenomics is a combination of the words “token” and “economics”, and it simply refers to a cryptocurrency’s supply and distribution patterns and other factors that affect its value. Shaikh didn’t provide any other information on the team’s plans to make its tokenomics more transparent or clarify whether the update will alter how tokens have previously been issued.
APT currently has a total token supply of 1 billion. Of of those, 51% will go toward community projects like grants for programmers and incentives to get new users to join the network. 16.5% more was set aside for the Aptos Foundation.
For those two groups, that comes to 675 million tokens total. When the Aptos network debuted in October, 130 million of those were immediately accessible—125 million for neighborhood initiatives and 5 million APT for the foundation. For the following ten years, each month’s unlocking of the remaining content is planned.
Core donors received 19% of the remaining APT supply, and investors received 13.48% of the remaining APT supply. These 355 million APT tokens are what are left. A 4-year lock up period, during which neither of those groups may sell their tokens, is in place. Yet they can earn interest by staking them with validators—the organizations whose hardware keeps the network running.
The overall supply of APT tokens will rise over time as a result of staking rewards. According to CoinGecko, there are presently 162 million APT tokens in use between monthly unlocks and validator awards.
Less than 24 hours before to the token’s launch on exchanges like FTX, Coinbase, and Binance, all of those information weren’t made public. Because of this, Aptos and its backers, notably FTX Ventures, Coinbase Ventures, and Binance Labs, received a lot of flak.
Cobie, presenter of the Up Only podcast, stated on Twitter that:
Surely it should be a prerequisite to listing something so users may have the fundamental information on what they’re buying.
The Aptos mainnet will soon receive an update, according to Shaikh, though he did not say when. Shaikh stated that:
increasing performance, continuing to give scalability, and also thinking about more efficiency in gas fees will be the main goals of the upcoming Aptos version.
The network had indeed “reopened the Testnet faucet,” as someone on a recent Aptos development call remarked on Twitter. By giving them APT tokens in exchange for running code on the blockchain’s test network, it serves as a reward for developers.
APT has received some attention recently, but not due of the testnet. According to CoinGecko, it initially traded for $3.48 at the beginning of the year before soaring 385% to $16.90 on Friday.
Arbitrage traders who have been taking advantage of APT’s listing at higher prices on South Korean exchanges than anywhere else in the world and Binance launching two APT liquidity pools, which reward users for depositing their tokens, appear to be responsible for at least some of the price movement.
“At the moment, there aren’t many tokens available.” Tom Dunleavy, a senior research analyst at Messari, said.
You still have a lot of short exposures. Thus, in addition to some level of speculation, I believe it to be just a short squeeze.
By entering into a derivative contract to wager against it, investors can “short” a token, such as APT. Simply put, they profit if the price decreases. If it increases, they incur losses. A short squeeze occurs when the value of an asset rises as a result of several traders “squeezing out” the short sellers.
Short selling APT sparked a lot of interest a few months back. The uproar about the tokenomics’ postponed introduction prompted traders to line up to short it.
Nonetheless, Aptos had signed a collaboration with Google Cloud by November. The business also operates a validator on the Aptos network, but the tech behemoth doesn’t have any preferences. Also, a Solana validator is running on it.
Strength of the developer community
The Move programming language, which was originally created at Meta (now Facebook) for the Diem blockchain, has been one of the major forces behind Aptos’s recent growth. Shaikh and co-founder Avery Ching, who had worked on Diem’s Novi wallet, were free to launch their own startup when the project came to an end.
In total, Aptos has 248 developers working on open-source projects within its ecosystem as of December. This is an increase of 755% from the same point in 2021. Yet if the ecosystem is to catch up to Solana, which had 2,082 total developers in December, data gathered by venture capital company Electric Capital, it still has a long way to go.
Electric Capital, a 2018 startup, has as part of its holdings the centralized exchange Kraken as well as the decentralized exchange dYdX. Although the company does not invest in Aptos, it did remark in its developer report that the blockchain had one of the fastest-growing developer communities.
According to co-founder and partner of Electric Capital Avichal Garg,
I assume a lot of it is on the ground developing developer community. They put on a lot of fantastic events, for instance. Another contributing factor is the enthusiasm among developers for the programming language Move.
In contrast to Rust, the language used to create smart contracts on Solana—the Goliath to Aptos’s David—Move has the advantage of being particularly simple to understand for developers.
Dunleavy, a Messari analyst, said that:
The transition from Rust to Move is fairly quick, according to the developers I’ve spoken with. Move is also quite expressive in terms of what developers can accomplish. Hence, it is not too ugly there.
Because there are now so few Web3 developers, there is fierce competition among projects. Shaikh says that:
There may be hundreds or tens of thousands of developers in the Web3 domain. That’s comparatively little compared to the rest of the world’s coders, who number in the millions.
Since it attempts to address the same issues as Solana, Aptos has been dubbed a “Solana killer” since its birth. And Solana itself, which debuted in 2019, was intended to be a competitor to Ethereum. Since then, Solana has been the more expedient and affordable blockchain to use for transactions, albeit it is also prone to network outages.
Speed and cost are two of the major measures that blockchains compete on, which is why Aptos’s promises of 130,000 transactions per second have received so much attention. In December, Aptos predicted that the gas fees—or the price of conducting a transaction on the network—would be a key area of development in the first half of this year.
The Aptos Foundation has been talking about partnerships with gaming and social media companies, according to Shaikh, who also hinted that these two industries will be major areas of concentration in 2023.