Inflation management has always been a core proposition of public chain economic models and ecological development. Recently, the Aptos community has been embroiled in intense debate over a proposal, AIP-119, to reduce staking rewards. Supporters view it as a necessary measure to curb inflation and activate ecological liquidity, while opponents warn that it may undermine the decentralized foundation of the network and even lead to capital outflows.
When the game between throttling and open source collides with the redistribution of validator interests, Aptos's reform is not only related to the future of the APT token economy but also reflects the deep contradictions in PoS public chain governance. By analyzing proposal disputes and comparing mainstream public chain models, we explore how Aptos seeks a breakthrough between high inflation and low activity.
The debate over whether inflation "surgery" is a cure or a harm.
AIP-119 was proposed by community member moonshiesty on April 17, 2025, on the Aptos Foundation's GitHub. The specific suggestion of the proposal is to reduce Aptos's base staking reward rate by 1% each month over the next three months, with the ultimate goal of reducing the annual percentage rate (APR) from around 7% (or 6.8%) at that time to 3.79%. In terms of content, the proposal itself is not complicated; it simply aims to alleviate APT inflation by lowering staking rewards, which is beneficial for the long-term health of the ecosystem. However, it touches on the core interests of large staking nodes accustomed to passive income, leading to considerable debate within the community.
The mainstream supported view suggests that this proposal can not only quickly reduce the inflation of APT but also incentivize token holders to transfer their funds to other DeFi activities on-chain, rather than just relying on passive staking.
However, from the discussions within the community, the controversy surrounding this proposal is not limited to the opposition from large holders; many members have also raised concerns from the perspective of small validators and the entire community about the potential negative implications that this proposal may trigger.
The reduction of staking rewards due to expenditures by opponents will have a greater impact on small validators. Many validators' profit margins will be compressed as a result, which may not cover the operational costs of running a validator (approximately $30,000 per year), forcing them to withdraw from the network. This, in turn, indirectly weakens the level of decentralization in the Aptos network, ultimately concentrating and tilting power and resources towards large validators.
Eric Amnis, co-founder of Amnis Finance, calculated in the forum that validators holding 1 million APT face annual server costs ranging from $72,000 to $96,000 (although this figure significantly deviates from the $35,000 proposed by the proposer). However, if the yield is reduced to 3.9%, the final return could be merely $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, there are comments suggesting that the reduced staking yield (3.79%) is lacking competitiveness compared to other chains that offer higher returns (such as Cosmos at about 15%), which may lead large investors and institutions seeking high yields to move their funds to other networks, reducing Aptos's TVL and liquidity, and creating a risk of capital outflow. Furthermore, the lower staking yield may also diminish the attractiveness of Aptos DeFi protocols for liquidity providers, affecting the growth of the protocols and user participation.
The common challenge of PoS governance: balancing rewards and inflation.
In fact, this proposal is similar to the previously proposed SIMD-0228 proposal on Solana, which was ultimately rejected. Both attempts to curb network inflation by reducing validator yield reflect the challenges of interest competition in public chain governance. This governance dilemma is often more pronounced in POS consensus mechanisms.
Therefore, regarding whether the proposal for Aptos is reasonable, the best approach is to compare how several similar public chains with such mechanisms balance this issue and what effects are produced.
Currently, Aptos' token inflation model is to issue an additional 7% per year, and according to the AIP-30 proposal, this maximum reward rate is planned to decrease by 1.5% per year (relative to the previous year's value) until it reaches an annualized lower limit of 3.25% after more than 50 years. As of April, APT's staking rate reached 76%, maintaining a high proportion among public chains. In terms of fee burning, Aptos currently burns all transaction fees, but since Aptos' on-chain fees are only a few thousand dollars per day, this burn is a drop in the bucket to fight inflation.
Judging from the trend of the token for more than a year, Solana is one of the more successful public chains in the POS mechanism. Unlike Aptos' current fixed issuance ratio, Solana's inflation model is a year-on-year decreasing model, with an initial value of 8% and then 15% per year thereafter, and is currently around 4.58%. Therefore, this dynamic inflation model seems to be exactly what Aptos is expected to target after the reform. However, for Solana, this inflation is still considered too high by the community, hence the emergence of Proposition 0228. In terms of staking ratio, Solana's current staking ratio is around 65%, which is lower than Aptos' 76%.
In terms of fee burning, previously 50% of Solana's transaction fees would be burned, but after the approval of proposal 0096, this 50% burn has been canceled and awarded to validators, which has led to more severe inflation for Solana. However, due to the high activity level of the Solana network, it seems to have not been significantly affected by the inflation.
In addition, another MOVE-based public chain, Sui, is often compared with Aptos. In terms of staking yield, Sui's yield is relatively low, ranging from 2.3% to 2.5%. Furthermore, the SUI token has a hard cap of 10 billion SUI, fundamentally controlling the possibility of unlimited issuance. In terms of staking rate, SUI's staking rate is about 76.73%, which is close to APT. However, in terms of fee destruction, Sui network's choice is to use it as rewards, and there is no destruction mechanism. Relatively speaking, Sui's hard cap model seems to have reduced a lot of inflation anxiety within the community, thus also showing relatively bright price performance.
In addition, the staking yield of Cosmos is quite typical, reaching as high as 14.26%. From the perspective of the circulating supply of tokens, it also shows a continuous upward trend. Currently, the staking rate of Cosmos is about 59%, and this inflation will continue until it reaches 67%. However, although the staking yield is very high, the price trend of the ATOM token has been continuously declining. From a peak of 44 dollars, it has dropped to a low of 3.81 dollars, a decline of 91%.
Aptos's Dilemma - Throttle or Open Source?
Overall, among the current major POS public chains, no one can perfectly solve the balance between inflation rate and network participation. In the process of solving these games, on the one hand, it is necessary to control the inflation rate to maintain the healthy development of the token economic model, and on the other hand, it is necessary to attract validators to participate in network governance through more reasonable staking returns. Ethereum, on the other hand, has achieved deflation through the transformation of POS and the destruction of basic fees. However, ETH also does not seem to have been able to usher in a token price increase due to the solution to the inflation problem. On the contrary, Solana's recent proposal so far is Proposition 0096 on increasing inflation, and Proposition 0028 on reducing deflation has been rejected by the community. But this doesn't seem to have had much of an impact on Solana's token price. In the final analysis, it is because Solana's network activity has always ranked among the top public chains.
Solving inflation is like tightening the belt, while increasing network activity is like opening the floodgates. For an active network, the balance between tightening and opening is naturally important, but for a network that is currently not very lively, how to enhance activity is the real key to increasing the network token's value. Looking at the current issues faced by Aptos, its TVL is only $1.1 billion, ranking 11th among public chains. Overall data is not impressive, and the current number of validators on the network is 149, with 495 full nodes; this data is also not very high. If a significant number of validators exit due to reduced yields, there is indeed a possibility of serious consequences.
Therefore, for Aptos, while considering "throttling" through AIP-119, it may be more prudent to thoughtfully consider its potential impact on the validator ecosystem and network decentralization. Compared to aggressively cutting rewards, a more urgent choice at this stage might still be how to "open-source"—that is, to enhance network activity, attract more quality projects to settle in, thus building a truly prosperous and sustainable ecosystem. This may be the key to supporting the long-term value of APT.
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Aptos Inflation Governance Dilemma: AIP-119 Proposal Sparks Controversy, Ecological Prosperity May Be the Solution
Author: Frank,
Inflation management has always been a core proposition of public chain economic models and ecological development. Recently, the Aptos community has been embroiled in intense debate over a proposal, AIP-119, to reduce staking rewards. Supporters view it as a necessary measure to curb inflation and activate ecological liquidity, while opponents warn that it may undermine the decentralized foundation of the network and even lead to capital outflows.
When the game between throttling and open source collides with the redistribution of validator interests, Aptos's reform is not only related to the future of the APT token economy but also reflects the deep contradictions in PoS public chain governance. By analyzing proposal disputes and comparing mainstream public chain models, we explore how Aptos seeks a breakthrough between high inflation and low activity.
The debate over whether inflation "surgery" is a cure or a harm.
AIP-119 was proposed by community member moonshiesty on April 17, 2025, on the Aptos Foundation's GitHub. The specific suggestion of the proposal is to reduce Aptos's base staking reward rate by 1% each month over the next three months, with the ultimate goal of reducing the annual percentage rate (APR) from around 7% (or 6.8%) at that time to 3.79%. In terms of content, the proposal itself is not complicated; it simply aims to alleviate APT inflation by lowering staking rewards, which is beneficial for the long-term health of the ecosystem. However, it touches on the core interests of large staking nodes accustomed to passive income, leading to considerable debate within the community.
The mainstream supported view suggests that this proposal can not only quickly reduce the inflation of APT but also incentivize token holders to transfer their funds to other DeFi activities on-chain, rather than just relying on passive staking.
However, from the discussions within the community, the controversy surrounding this proposal is not limited to the opposition from large holders; many members have also raised concerns from the perspective of small validators and the entire community about the potential negative implications that this proposal may trigger.
The reduction of staking rewards due to expenditures by opponents will have a greater impact on small validators. Many validators' profit margins will be compressed as a result, which may not cover the operational costs of running a validator (approximately $30,000 per year), forcing them to withdraw from the network. This, in turn, indirectly weakens the level of decentralization in the Aptos network, ultimately concentrating and tilting power and resources towards large validators.
Eric Amnis, co-founder of Amnis Finance, calculated in the forum that validators holding 1 million APT face annual server costs ranging from $72,000 to $96,000 (although this figure significantly deviates from the $35,000 proposed by the proposer). However, if the yield is reduced to 3.9%, the final return could be merely $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, there are comments suggesting that the reduced staking yield (3.79%) is lacking competitiveness compared to other chains that offer higher returns (such as Cosmos at about 15%), which may lead large investors and institutions seeking high yields to move their funds to other networks, reducing Aptos's TVL and liquidity, and creating a risk of capital outflow. Furthermore, the lower staking yield may also diminish the attractiveness of Aptos DeFi protocols for liquidity providers, affecting the growth of the protocols and user participation.
The common challenge of PoS governance: balancing rewards and inflation.
In fact, this proposal is similar to the previously proposed SIMD-0228 proposal on Solana, which was ultimately rejected. Both attempts to curb network inflation by reducing validator yield reflect the challenges of interest competition in public chain governance. This governance dilemma is often more pronounced in POS consensus mechanisms.
Therefore, regarding whether the proposal for Aptos is reasonable, the best approach is to compare how several similar public chains with such mechanisms balance this issue and what effects are produced.
Currently, Aptos' token inflation model is to issue an additional 7% per year, and according to the AIP-30 proposal, this maximum reward rate is planned to decrease by 1.5% per year (relative to the previous year's value) until it reaches an annualized lower limit of 3.25% after more than 50 years. As of April, APT's staking rate reached 76%, maintaining a high proportion among public chains. In terms of fee burning, Aptos currently burns all transaction fees, but since Aptos' on-chain fees are only a few thousand dollars per day, this burn is a drop in the bucket to fight inflation.
Judging from the trend of the token for more than a year, Solana is one of the more successful public chains in the POS mechanism. Unlike Aptos' current fixed issuance ratio, Solana's inflation model is a year-on-year decreasing model, with an initial value of 8% and then 15% per year thereafter, and is currently around 4.58%. Therefore, this dynamic inflation model seems to be exactly what Aptos is expected to target after the reform. However, for Solana, this inflation is still considered too high by the community, hence the emergence of Proposition 0228. In terms of staking ratio, Solana's current staking ratio is around 65%, which is lower than Aptos' 76%.
In terms of fee burning, previously 50% of Solana's transaction fees would be burned, but after the approval of proposal 0096, this 50% burn has been canceled and awarded to validators, which has led to more severe inflation for Solana. However, due to the high activity level of the Solana network, it seems to have not been significantly affected by the inflation.
In addition, another MOVE-based public chain, Sui, is often compared with Aptos. In terms of staking yield, Sui's yield is relatively low, ranging from 2.3% to 2.5%. Furthermore, the SUI token has a hard cap of 10 billion SUI, fundamentally controlling the possibility of unlimited issuance. In terms of staking rate, SUI's staking rate is about 76.73%, which is close to APT. However, in terms of fee destruction, Sui network's choice is to use it as rewards, and there is no destruction mechanism. Relatively speaking, Sui's hard cap model seems to have reduced a lot of inflation anxiety within the community, thus also showing relatively bright price performance.
In addition, the staking yield of Cosmos is quite typical, reaching as high as 14.26%. From the perspective of the circulating supply of tokens, it also shows a continuous upward trend. Currently, the staking rate of Cosmos is about 59%, and this inflation will continue until it reaches 67%. However, although the staking yield is very high, the price trend of the ATOM token has been continuously declining. From a peak of 44 dollars, it has dropped to a low of 3.81 dollars, a decline of 91%.
Aptos's Dilemma - Throttle or Open Source?
Overall, among the current major POS public chains, no one can perfectly solve the balance between inflation rate and network participation. In the process of solving these games, on the one hand, it is necessary to control the inflation rate to maintain the healthy development of the token economic model, and on the other hand, it is necessary to attract validators to participate in network governance through more reasonable staking returns. Ethereum, on the other hand, has achieved deflation through the transformation of POS and the destruction of basic fees. However, ETH also does not seem to have been able to usher in a token price increase due to the solution to the inflation problem. On the contrary, Solana's recent proposal so far is Proposition 0096 on increasing inflation, and Proposition 0028 on reducing deflation has been rejected by the community. But this doesn't seem to have had much of an impact on Solana's token price. In the final analysis, it is because Solana's network activity has always ranked among the top public chains.
Solving inflation is like tightening the belt, while increasing network activity is like opening the floodgates. For an active network, the balance between tightening and opening is naturally important, but for a network that is currently not very lively, how to enhance activity is the real key to increasing the network token's value. Looking at the current issues faced by Aptos, its TVL is only $1.1 billion, ranking 11th among public chains. Overall data is not impressive, and the current number of validators on the network is 149, with 495 full nodes; this data is also not very high. If a significant number of validators exit due to reduced yields, there is indeed a possibility of serious consequences.
Therefore, for Aptos, while considering "throttling" through AIP-119, it may be more prudent to thoughtfully consider its potential impact on the validator ecosystem and network decentralization. Compared to aggressively cutting rewards, a more urgent choice at this stage might still be how to "open-source"—that is, to enhance network activity, attract more quality projects to settle in, thus building a truly prosperous and sustainable ecosystem. This may be the key to supporting the long-term value of APT.