Aptos stake rewards reform sparks controversy, ecological development becomes key

Inflation control has always been a core issue in the economic model and ecological development of public chains. Recently, the Aptos community has engaged in intense discussions about a proposal AIP-119 aimed at reducing stake rewards. Supporters believe this is a necessary measure to curb inflation and activate ecological liquidity, while opponents worry it may weaken the decentralized foundation of the network and even lead to capital outflow.

When the trade-off between throttling and open sourcing meets the redistribution of validators' interests, Aptos's reform not only concerns the future of the APT token economy but also reflects the deep contradictions in the governance of PoS public chains. By analyzing the proposal disputes and comparing mainstream public chain models, we explore how Aptos seeks breakthroughs between high inflation and low activity.

The Controversy Over Reducing Staking Rewards

The AIP-119 proposal was presented on April 17, 2025, on the Aptos Foundation's GitHub. This proposal suggests reducing the base stake rewards rate of Aptos by 1% each month over the next three months, aiming to lower the annual percentage rate (APR) from about 7% to 3.79%. This proposal aims to alleviate APT inflation, benefiting the long-term health of the ecosystem, but it also touches on the core interests of large staking nodes that rely on passive income, thus sparking intense discussions within the community.

Supporters believe that this proposal can not only quickly reduce the inflation rate of APT but also encourage token holders to transfer their funds to other DeFi activities on the chain, rather than relying solely on passive stake.

However, many community members have raised concerns about the potential negative impacts of this proposal from the perspective of small validators and the entire community.

Opponents point out that a significant reduction in staking rewards will have a greater impact on small validators. The profit margins of many validators may be squeezed to the point where they cannot cover operating costs (approximately $30,000 per year), forcing them to exit the network. This, in turn, may lead to a decrease in the decentralization of the Aptos network, concentrating power and resources in large validators.

A co-founder of a certain DeFi project detailed the income and expenditure of validators. Currently, validators holding 1 million APT face annual server costs of approximately $72,000 to $96,000. If the yield drops to 3.9%, the final earnings may only be $13,000, leading to a situation where expenses exceed income. Only those holding more than 10 million APT can barely make a profit, which will directly eliminate small validators.

In addition, some comments suggest that the reduced staking yield (3.79%) lacks competitiveness compared to other public chains that offer higher returns (such as Cosmos at about 15%), which may lead large holders and institutions seeking high yields to transfer funds to other networks, reducing Aptos's TVL and liquidity, and creating a risk of capital outflow. The lower staking yield may also decrease the attractiveness of Aptos DeFi protocols to liquidity providers, affecting the growth of the protocols and user participation.

Common Challenges Facing PoS Public Chains: Balancing Rewards and Inflation

This proposal is similar to a previously proposed and ultimately rejected proposal on a certain public chain, both attempting to curb network inflation by reducing validator yields, reflecting the dilemma of interest games in public chain governance. This governance dilemma is particularly prominent in the POS consensus mechanism.

To evaluate the rationality of the Aptos proposal, we can compare how several similar mechanism public chains balance this issue and the effects produced.

Currently, Aptos's token inflation model issues an annual increase of 7%. According to an earlier proposal, the maximum rewards rate is planned to decrease by 1.5% each year (relative to the previous year's value), until it reaches a 3.25% annual lower limit after more than 50 years. As of April, the staking rate of APT has reached 76%, maintaining a high proportion among public chains. In terms of fee burning, all transaction fees on Aptos are currently burned, but since the on-chain fees are only a few thousand dollars per day, this burning has a negligible effect on resisting inflation.

From the year-long trend of the token, a well-known PoS public chain has performed relatively well in this regard. Unlike Aptos' current fixed issuance ratio, this public chain adopts a year-on-year decreasing inflation model, with an initial value of 8%, decreasing by 15% each year, and currently at about 4.58%. This dynamic inflation model seems to be the expected goal after Aptos' proposed reforms. However, for this public chain, this inflation rate is still considered too high by the community. In terms of staking ratio, the current staking ratio of this public chain is about 65%, lower than Aptos' 76%.

In terms of fee destruction, this public chain previously had 50% of the transaction fees destroyed, but after the recent proposal was passed, this 50% destruction was canceled and given as rewards to validators, leading to more severe inflation. However, due to the high activity level of the public chain network, it seems to be less affected by inflation.

Another MOVE-based public chain is often compared to Aptos. In terms of staking rewards, this public chain has a lower yield, only between 2.3% and 2.5%. Its token has a hard cap of 10 billion, fundamentally controlling the possibility of unlimited issuance. In terms of staking rate, this public chain's staking rate is about 76.73%, close to APT. However, in terms of fee processing, this public chain network chooses to use the fees as rewards and does not have a burn mechanism. Relatively speaking, the hard cap model of this public chain seems to have reduced the community's inflation anxiety, so its price performance has also been quite impressive.

In addition, there is a typical staking yield for a public chain, reaching as high as 14.26%. In terms of the circulation of tokens, there is also a trend of continuous growth. Currently, the staking rate of this public chain is approximately 59%, and this inflation will continue until it reaches 67%. However, although the staking rewards are very high, the price trend of the tokens for this public chain has been continuously declining. From a high point of 44 dollars, it has dropped to a low of 3.81 dollars, a decrease of 91%.

The Choice of Aptos: Throttle or Open Source?

Overall, among the major PoS public chains, none have yet perfectly solved the balance between inflation rate and network participation. In addressing these games, on one hand, it is necessary to control the inflation rate to maintain the healthy development of the token economic model, while on the other hand, it is important to attract validators to participate in network governance through reasonable stake rewards. A large public chain achieved deflation through PoS transformation and basic fee destruction, but it seems that this did not lead to an increase in token prices. On the contrary, a recent proposal from another public chain was about increasing inflation, while the proposal to reduce inflation was rejected by the community. However, this does not seem to have significantly affected the token price of that public chain. Ultimately, it is because the network activity of that public chain has consistently ranked among the top of all major public chains.

Solving inflation is like throttling, while increasing network activity is like opening the tap. For an active network, the balance between opening and throttling is naturally important, but for a network that is currently not very lively, how to increase activity is the real key to enhancing the value of the network's tokens. Looking at the problems currently faced by Aptos, its TVL is only $1.1 billion, ranking 11th among public chains. Overall data is not particularly impressive, and the current number of validators in the entire network is 149, with 495 full nodes, which is also not too high. If many validators exit due to reduced yield, there is indeed a possibility of significant damage.

Therefore, for Aptos, while considering "throttling" through AIP-119, it may be more prudent to deeply contemplate its potential impact on the validator ecosystem and network decentralization. Compared to aggressively cutting rewards, the more urgent choice at this stage might be how to "open source"—that is, to enhance the network's activity, attract more quality projects, and thereby build a truly prosperous and sustainable ecosystem. This may be the key to supporting APT's long-term value.