Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policies before making any financial decisions.
In just four months since the launch of the Aptos (APT) mainnet, the novel Layer 1 network hit its all-time high over the weekend. On Sunday, the chain’s native APT cryptocurrency hit $14.48. This is a 368% increase from Aptos (APT)’s all-time low in December and a 70% increase since its introductory price of $8.5 in October. With a market cap of $2 billion, the recent APT rally places the Aptos network as the 31st largest cryptocurrency, just ahead of ApeCoin (APE).
The question is, what is fueling Aptos’ rally after a somewhat botched start in October?
Binance adds Aptos liquidity pools in January
On Jan. 20, Binance announced that it would launch its much-anticipated Aptos liquidity pools, consisting of APT/BTC and APT/USDT trading pairs. This allows users to add funds into liquidity pools against a return, also known as yield farming. As the world’s largest exchange with a daily volume of USD 20 billion and a market share of ~60%, Binance is the gateway to crypto ecosystems.
With Binance support established, APT trading and speculation started in earnest. This includes the Aptos-based NFT marketplace Topaz. As we saw with Solana’s BONK surge, trading volume increased for Aptos’ NFT collections.
Some notable NFT collections on Aptos are AptoPunks, Spooks, BabyApetos, MAVRIK, and Kreachers. If some of them sound familiar, AptoPunks is an Aptos variant of the blue-chip CryptoPunks that boasts the largest increase in trading volume at over 2,500%. With AptoMonkeys, BruhBears, and Aptomings, the Aptos network has seen a surge in user transactions.
Since the beginning of the year, Aptos transactions have increased by +114%. Photo credit: Aptos Explorer
User transactions peaked at 176,000 on Saturday. This was a precursor to Sunday’s all-time high in APT price, which hit $14.48. However, this is still a long way from Ethereum’s daily transactions, which typically reach a million, not counting the numerous Layer 2 networks.
Nonetheless, the uptrend in Aptos NFT trading shows that a significant portion of the crypto market believes that Aptos will become the next Solana. Whether that comes true will depend on Aptos’ reputation in the future.
Aptos Investment Buzz and Facebook Legacy
Last year, Aptos Labs raised $350 million from established venture capital (VC) firms. These included not only Andreessen Horowitz, Multicoin Capital, and Circle Ventures, but also the now-defunct FTX Ventures, which led Aptos’ $150 million July funding round.
Former Facebook employees, led by Aptos Labs CEO Mo Shaikh, were primarily responsible for this investment frenzy. They had previously created the Diem crypto project for Facebook, formerly Libra, programmed in the Move language, which was explicitly designed for Diem’s customizable transactional logic.
They had also created Meta’s wallet Navi, which has since been canceled along with Diem. In January 2022, Silvergate Bank purchased Diem’s intellectual property and technology assets.
Basics behind the Aptos hype
Just as Solana aimed to improve Ethereum dominance with next-gen performance, so does Aptos. Without relying on layer 2 solutions, Aptos is a layer 1 proof-of-stake blockchain, just like Solana but with a twist. Aptos features a modular architecture and a parallel transaction engine (BlocksSTM) to increase network throughput.
Aptos validators can be active or inactive, with light and full node clients replicating transactions, while light nodes manage validators like wallets. This node segmentation, parallel transaction, and concurrent transaction execution allows Aptos to theoretically achieve 160,000 transactions per second (tps).
Photo credit: Aptos Labs
In real time, however, Aptos Explorer shows the performance of the network at typically eight tps, which is an average of 15 tps over the past month, comparable to Ethereum. Of course, there needs to be an increase in traffic to demonstrate the power of Aptos.
The Move language, which delves deeper into the Aptos architecture, defines two critical cogs – modules and signer objects. As a blockchain-based script, the Aptos module does not store any data. Instead, modules call other modules directly without signing transactions. When a transaction is signed, a resource object is created – signer.
As resource objects, signers register transaction data to a wallet address without the possibility of copying, i.e. spamming. Therefore, only user accounts store resources, allowing for both decentralization and security.
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Less than forthcoming Aptos Tokenomics
Typically, crypto projects announce their tokenomics well in advance, so potential investors know what to expect. Aptos Labs has chosen to go against the grain. For better or worse, this prompted a lot of FUD on social media, with many speculating it was a marketing gimmick.
Aptos launched with a valuation of $2bn and failed to provide its tokenomics information at launch.
This was by no means an accident.
This was intentional.
— Aylo (@alpha_pls) October 18,
Finally, the value of each token is strongly determined by its issuance schedule and overall supply. After the launch, on October 18th, the Aptos Foundation published their tokenomics. The maximum total supply of APT tokens is 1 billion, broken down as follows:
- Community 51.02%
- Main contributor 19%
- Founding 16.5%
- Investors 13.48%
There are currently only 159.3 million APT tokens in supply, which is ~16% of the total supply. The entire 1 billion APT tokens will be unlocked on October 13, 2032 according to their vesting schedule.
Aptos (APT) token issuance plan. Photo credit: TokenUnlocks
Due to the heavy investments from VC firms, they might do some rallies in the future, like Solana did. The goal is likely to increase Aptos usage so that APT tokens will eventually outperform ETH usage when unlocked. Otherwise, demand would fall back from the unlocked supply, which in turn would lower the APT price.
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