Aptos Inflation Governance Sparks Controversy: Seeking Ecological Prosperity and Economic Balance

Inflation governance has always been a core issue in the economic model and ecological development of public blockchains. Recently, the Aptos community has sparked heated discussions over a proposal AIP-119 to reduce staking 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 outflows.

When the game of throttling and open source 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 PoS public chain governance. By analyzing the proposal disputes and comparing mainstream public chain models, we explore how Aptos seeks breakthroughs between high inflation and low activity.

Inflation "Surgery" Sparks Controversy

The AIP-119 proposal was submitted on April 17, 2025, suggesting a monthly reduction of the base staking reward rate for Aptos by 1% over the next three months, with the ultimate goal of lowering the annual percentage rate (APR) from approximately 7% to 3.79%. This proposal aims to alleviate APT inflation and promote the long-term healthy development of the ecosystem, but it also touches upon the core interests of large staking nodes that rely on passive income.

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

However, opponents have raised some concerns. They believe that a significant reduction in staking rewards may have a greater impact on small validators, compressing their profit margins and even causing some validators to exit the network due to an inability to cover operating costs. This could, in turn, weaken the decentralization of the Aptos network, concentrating power and resources among large validators.

Analyses indicate that if the yield is reduced to 3.9%, validators holding 1 million APT may only earn about $13,000 per year, which is far below operating costs. Only validators 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 lacks competitiveness compared to other public chains that offer higher returns, which may lead to capital outflow and a decrease in Aptos's TVL and liquidity. The lower staking yield may also reduce the attractiveness of Aptos DeFi protocols to liquidity providers, affecting the growth of the protocols and user participation.

Common Challenges in PoS Governance: Balancing Rewards and Inflation

This proposal reflects the interests and power struggles in public chain governance, which is particularly prominent in the POS consensus mechanism. By comparing several public chains with similar mechanisms, we can better assess the rationality of the Aptos proposal.

Currently, Aptos's token inflation model issues an annual increase of 7%, with plans to reduce it by 1.5% each year until it reaches an annual lower limit of 3.25% after over 50 years. As of April data, the staking rate of APT has reached 76%. In terms of fee burning, currently, all transaction fees on Aptos are burned, but due to low on-chain fees, its effect on resisting inflation is limited.

In contrast, Solana adopts a year-over-year decreasing inflation model, starting at an initial rate of 8%, reducing by 15% each year, and currently around 4.58%. The staking ratio of Solana is about 65%, which is lower than Aptos. In terms of fee processing, Solana recently changed its proposal to reward validators instead of burning 50% of the fees, which has somewhat exacerbated inflation.

Sui, as another MOVE-based public chain, has a relatively low staking yield, ranging from 2.3% to 2.5%. The SUI token has a hard cap of 10 billion SUI, fundamentally controlling the possibility of infinite issuance. The staking rate of Sui is approximately 76.73%, which is close to APT, but there is no fee burn mechanism.

Cosmos has taken a different approach, with staking rewards as high as 14.26% and a staking rate of about 59%. However, despite the high staking rewards, the price of ATOM tokens has continued to decline, dropping 91% from its peak.

The Choice of Aptos: Throttle or Open Source?

Currently, major POS public chains have not perfectly solved the balance between inflation rate and network participation. Ethereum has achieved deflation through its transition to POS and the destruction of base fees, but this has not directly led to an increase in token prices. A recent proposal by Solana has actually increased inflation, but it seems to have had little impact on its token price, mainly due to its high network activity.

For Aptos, while considering "throttling" through AIP-119, it is important to carefully consider its potential impact on the validator ecosystem and network decentralization. Rather than aggressively cutting rewards, a more pressing option might be how to "open source" — that is, to enhance network activity, attract more quality projects, and build a truly prosperous and sustainable ecosystem. This may be the key to supporting the long-term value of APT.

Currently, the TVL of Aptos is only $1.1 billion, ranking 11th among public chains, with overall performance not being particularly impressive. The total number of validators on the network is 149, and there are 495 full nodes, which are not very high either. If a significant number of validators exit due to reduced yields, it could indeed have a major impact on the network.

Therefore, Aptos needs to find a balance between inflation control and network activity. At this current stage, it may be more important to focus on how to attract more developers and users, enhancing the network's utilization and value creation capabilities, rather than overly concentrating on inflation control. Only after the ecosystem truly thrives can it better cope with challenges posed by adjustments in economic models such as inflation.