What is Aptos? Inside the new Move-based Layer 1 chain

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The central theses

  • Aptos is a new high-throughput Layer 1 blockchain that uses a novel smart contract programming language called Move.
  • The project is seen as the technological successor to Meta’s abandoned blockchain network Diem.
  • Aptos has been dubbed a potential “Solana killer” due to its advertised theoretical throughput of 100,000 transactions per second.

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Aptos is a scalable proof-of-stake Layer 1 blockchain that uses a novel smart contract programming language called Move. The project is being 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 over 100,000 transactions per second. The project is the brainchild of two former Meta engineers, Mo Shaikh and Avery Ching, and is believed to be the technological successor to Meta’s abandoned blockchain project Diem.

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

It is worth noting that Aptos did all of this prior to the launch of its blockchain, which only went live on mainnet on October 17th. To reward the early adopters of its testnet and to fairly distribute the initial token allocation, Aptos airdropped 150 APT tokens (worth approximately $1,237 at launch) to 110,235 eligible addresses. According to CoinGecko data, Aptos currently has a fully diluted market cap of around $9.2 billion, despite launching just a few days ago with little activity on the network. Aside from its origins and ties to Meta, evaluation of the project has raised questions.

What makes Aptos so special?

From a technical perspective, the driving force behind Aptos boils down to two things: Move, the Rust-based programming language developed independently from Meta, and the network’s unique parallel transaction processing capabilities.

Move is a new smart contract programming language that emphasizes security and flexibility. Its ecosystem includes a compiler, 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 ambitions to evolve into the “JavaScript of Web3” in terms of usage. In other words, Meta intended Move to become the language of choice for developers to quickly write secure code using digital assets.

With Move, Aptos was designed to theoretically achieve high transaction throughput and scalability without sacrificing security. It uses a pipelined and modular approach to the critical phases of transaction processing. For context, most blockchains, especially the top ones like Bitcoin and Ethereum, execute transactions and smart contracts sequentially. Put simply, 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 growth in the network’s computing power does not result in faster transaction processing, as the entire network is effectively doing the same thing, functioning as a single node.

Aptos differs from other blockchains in its parallelized approach to transaction processing and execution, meaning its network uses all available physical resources to process many transactions at once. This results in much higher network throughput and transaction speeds, resulting in significantly lower costs and a better user experience for blockchain users. Aptos expands on this issue in its technical white paper, saying:

“To maximize throughput, increase concurrency and reduce technical complexity, transaction processing on the Aptos blockchain is divided into separate phases. Each stage is fully independent and individually parallelizable, similar to modern superscalar processor architectures. Not only does this provide significant performance benefits, but it also enables the Aptos blockchain to offer new modes of validator-client interaction.”

However, while Aptos claims to have already reached 10,000 transactions per second on the testnet and is targeting 100,000 transactions per second as the next milestone, users should take its claims with caution as they are still battle-tested. 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 overly centralized.

Dubious tokenomics

On Oct. 17, Aptos sparked significant outrage within the crypto community when it launched its blockchain and native governance and utility token, APT, without first disclosing its overall offering, distribution, or issuance rate to the public. After APT’s price plummeted around 40% in the first few trading sessions, Aptos tried to correct its mistake and appease community outrage by revealing its tokenomics.

APT token distribution

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 was allocated to early investors and the company. Namely, instead of giving the community the 51% of the tokens it was supposedly allocated directly, either through airdrops, grants, or staking rewards, Aptos allocated them to Aptos Labs and the Aptos Foundation. Additionally, 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 staking rewards that aren’t 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 max supply. According to the official token supply plan, the inflation rate will start at 7% and decrease by 1.5% annually until it reaches an annual supply rate of 3.25% (expected over 50 years). Transaction fees are initially burned, although this mechanic may be revised in the future through governance votes.

Is Aptos the next Solana killer?

Although Aptos has been running for less than a week, it has already been heralded as a potential “Solana killer”. This is mainly due to the advertised throughput of 100,000 transactions per second. For comparison: Solana can only manage about 60,000 – but network-wide outages occur regularly.

Aside from being highly scalable, Aptos shares other similarities with Solana, including strong venture capital backing and a top-down approach to ecosystem building. With a multi-billion dollar war chest to start with and the allure of being the “brilliant new thing,” Aptos could steal the spotlight from Solana in the future if it can build a thriving ecosystem. Also, it should certainly help Austin Virtsthe former head of marketing at Solana, is now responsible for building ecosystems at Aptos.

All in all, Solana Aptos is still miles ahead in terms of ecosystem health and network adoption. By keeping its tokenomics opaque and allocating most of the 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 sets out to do on the technology front, it has a chance to capture a significant market share from all other smart contract-enabled Layer 1 networks.

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

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