What is Aptos? Within the new motion-based layer 1 chain

Share this article

Aptos is a scalable Proof-of-Stake Layer 1 blockchain that uses a new smart contract programming language called Move. The project was developed by Aptos Labs, a blockchain startup led by two former Meta employees.

Aptos unpacked

Aptos is a Proof-of-Stake based Layer 1 blockchain that combines parallel transaction processing with a new smart contract language called Move to achieve a theoretical transaction throughput of more than 100,000 transactions per second. The project is the brainchild of two former Meta engineers, Mo Shaikh and Avery Ching, and is considered the technological successor to Meta’s abandoned blockchain project Diem.

Aptos first made waves in the crypto industry in March this year after it emerged that it had raised $200 million in a seed round led by renowned venture capital firm Andreessen Horowitz. In July, the startup raised another $150 million at a pre-money valuation of $1.9 billion in a Series A funding round led by FTX Ventures and Jump Crypto, before its valuation reached $4 billion in a venture two months later increase led by Binance Labs.

It’s worth highlighting that Aptos did all this before launching its blockchain, which only went live on Mainnet on October 17. To reward early users of its testnet and fairly distribute the initial token allocation, Aptos dropped 150 APT tokens (worth approximately $1,237 at launch) to 110,235 eligible addresses. Per CoinGecko dataAptos currently has a fully diluted market cap of approximately $9.2 billion, despite only launching a few days ago and seeing little activity on the network. In addition to the origin and ties with Meta, the appreciation of the project has raised questions.

What makes Aptos special?

From a technical perspective, the driving force behind Aptos can be summed up in two things: Move, the Rust-based programming language independently developed by Meta, and the network’s unique capabilities to process parallel transactions.

Movement is a new smart contract programming language that emphasizes security and flexibility. The ecosystem includes a compiler, a virtual machine, and many other developer tools that effectively serve as the backbone of the Aptos network. Although Meta originally wanted Move to power the Diem blockchain, the language was designed to be platform agnostic with the ambition to evolve towards the “JavaScript of Web3” in usage. In other words, Meta intended Move to become the developer language of choice for quickly writing secure code with digital assets.

Using Move, Aptos was built to theoretically achieve high transaction throughput and scalability without sacrificing security. It uses a pipelined and modular approach for the critical stages of transaction processing. For context, most blockchains, especially the top chains like Bitcoin and Ethereum, execute transactions and smart contracts sequentially. Simply put, this means that all transactions in the mempool – where all submitted transactions await confirmation from the network’s validators – must be verified individually and in a specific order. This means that the growth of the network’s computing power does not translate into faster transaction processing, because the entire network is essentially doing the same thing and acting as a single node.

Aptos differs from other blockchains in its parallel approach to transaction processing and execution, meaning the network uses all available physical resources to process many transactions simultaneously. This leads to much greater network throughput and transaction speeds, resulting in significantly lower costs and a better user experience for blockchain users. Expansion of this topic in its technical white paperAptos says:

“To maximize throughput, increase concurrency, and reduce technical complexity, transaction processing on the Aptos blockchain is divided into separate phases. Each stage is completely independent and individually parallelizable, resembling modern superscalar processor architectures. This not only delivers significant performance benefits, but also enables the Aptos blockchain to provide new ways of validator-client interaction.”

While Aptos claims to have already reached 10,000 transactions per second on testnet and is targeting 100,000 transactions per second as the next milestone, users should take these claims with a grain of salt as they have yet to be put to the test. Other Layer 1 networks and sidechains making similar claims, including Solana and Polygon, have suffered numerous network outages since their inception and have otherwise been criticized for being too centralized.

Dubious tokenomics

On October 17, Aptos caused widespread outrage within the crypto community launched its blockchain and native governance and utility token APT without first disclosing its total supply, distribution, or issuance rate to the public. After APT’s price fell by around 40% during the first hours of trading, Aptos tried to correct its mistake and calm the community’s outrage by revealing its tokenomics.

Despite the generous airdrop to over 100,000 addresses, the move towards transparency was met with even more outrage after the community learned that the entire token supply had been allocated to early investors and the company. In fact, instead of giving the community the 51% of tokens that were reportedly allocated directly to it, either through airdrops, grants or stake rewards, Aptos allocated them to Aptos Labs and the Aptos Foundation. Furthermore, according to the team’s blog post, “82% of the tokens on the network are staked across all categories,” meaning the company and early insiders will earn the majority of the staking rewards that are not subject to lockups.

Additionally, Aptos currently has a circulating supply of 130 million tokens, a total supply of 1,000,935,772, and an unlimited maximum supply. According to the official token supply schedule, the inflation rate will start at 7% and decrease by 1.5% annually until it reaches an annual supply of 3.25% (this is expected to last well over 50 years). The transaction fees will be burned initially, although this mechanism may be revised in the future through board votes.

Is Aptos the next Solana killer?

Despite being active for less than a week, Aptos is already being heralded as a potential ‘Solana killer’. This is mainly due to the stated throughput speed of 100,000 transactions per second. By comparison, Solana can only handle about 60,000, but regularly experiences network outages.

In addition to its high scalability, Aptos shares other similarities with Solana, including its strong venture capital backing and top-down approach to building ecosystems. With a multi-billion dollar war chest from scratch and the appeal of being the “shiny new thing,” Aptos could very well steal the spotlight from Solana in the future if it can grow a thriving ecosystem. Plus, it should definitely help with that Austin Virtsthe former Head of Marketing at Solana, is now responsible for building ecosystems at Aptos.

All told, Solana is still miles ahead of Aptos in terms of ecosystem health and network adoption. By keeping its tokenomics opaque and allocating most of its supply to early investors and insiders, Aptos started its crypto journey on shaky terms with the crypto community, which could hurt it in the long run. However, if Aptos delivers even half of what it wants to achieve technologically, it has a chance to capture significant market share from all other smart contract-based Layer 1 networks.

Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies.

Share this article