You are currently viewing APT Could Become Scarcer as Aptos Foundation Proposes Supply and Reward Reforms

  • Aptos is overhauling its token supply model to increase burns, reduce emissions and introduce a hard cap in its latest proposal.
  • It intends to increase the gas fees 10x and halve the annual staking reward to 2.16%, one year since the reward was slashed from 7%.

The Aptos Foundation has published a new proposal that seeks to make the APT token scarcer by reducing emissions and increasing burns.

The new proposal calls for performance-driven tokenomics that align the supply mechanics with network utilization as Aptos evolves from a bootstrapped project to one of the main players in the blockchain sector.

In the three years since Aptos launched, it now records nearly 10,000 open-source repositories and 200 projects, including initiatives by giants like Apollo and BlackRock, as RWA tokenization shot into the top three last year, as we reported.

However, the Foundation believes that the time has come for the network to transition from a bootstrapped project seeking to attract developers by any means necessary into a mainstream network relied on to secure billions of dollars. To this effect, it has unveiled a new tokenomics model that aims to make APT a deflationary token.

One of the main updates is the slashing of the staking rewards, which currently stands at 5.19% after last year’s AIP-119 upgrade that cut it from 7%. The Foundation wants this reduced to 2.6%. Additionally, it wants those who stake for longer terms to get better rewards than short-term stakers “to encourage stable, long-term participation in securing the network while ensuring appropriate token supply emissions.”

10x Gas Fee Increase to Cut Aptos (APT) Supply

The Foundation also proposed a 10x increase in gas fees. On Aptos, all the gas fees are paid in APT and are burned immediately they are paid. However, since the fees are so low, the burning has little effect on the overall supply. The proposal claims that a 10x increase would lead to bigger burns and contribute to a lower supply.

A fee increase is always a controversial proposal. Recently, ICP founder Dominic Williams proposed that the network increase fees 5x under Mission 70. As we reported, the ICP community immediately criticized Williams for losing touch with the struggles of the network’s developers, claiming that a fee increase would cripple the struggling ICP projects.

However, on Aptos, a 10x increase would not have such a massive impact as the fees would still be among the lowest in the sector, the Foundation argues. It estimates the fee for one transaction after the increase would come to around $0.00014.

It added:

This, in conjunction with increased onchain activity and transactions from new applications being built on Aptos, would substantially increase the aggregate amount of APT that is burned and removed from circulation.

Increasing fees has little impact unless there’s a high volume of transactions, the proposal acknowledges. The Foundation will support developers building on Aptos this year, and Decibel, a new DeFi platform launching on the network, will play a big part in boosting transaction count.

Aptos
Image courtesy of Aptos.

The proposal also suggests a new hard cap at 2.1 billion APT. Currently, the network has 1.196 billion tokens in circulation, with the first billion minted at mainnet while 196 million has been distributed via staking. The new hard cap would leave room for staking rewards over several years, before the network transitions to fully funding validator rewards with transaction fees.

APT trades at $0.8555, dropping 3.8% in the past week to bring its total losses in the past month to 45.7%.