Aptos Inflation Governance Dilemma: Community Engages in Heated Debate on AIP-119 Proposal

Recently, the Aptos community has engaged in intense discussions surrounding a proposal AIP-119 aimed at reducing staking rewards. Supporters argue that this is a necessary measure to curb inflation and activate ecological liquidity, while opponents warn that it may weaken the decentralized foundation of the network and even lead to capital outflow. This debate not only concerns the future of the APT token economy but also reflects the deep-seated contradictions in the governance of PoS public chains.

Proposal Sparks Community Divisions

The AIP-119 proposal suggests reducing the base staking reward rate of Aptos by 1% each month over the next three months, with the ultimate goal of lowering the annual yield from about 7% to 3.79%. Supporters believe that this proposal can not only quickly reduce APT inflation but also incentivize users to shift their funds to other DeFi activities on the chain, rather than solely relying on passive staking.

However, opponents have raised a series of concerns. They believe that a significant reduction in staking rewards will have a greater impact on smaller validators, potentially leading many validators to exit the network due to an inability to cover operational costs, which could indirectly weaken the decentralization of the Aptos network. Furthermore, the reduced staking yield may lack competitiveness, leading to a risk of capital outflow and affecting the growth of DeFi protocols and user participation.

Common Challenges Faced by PoS Public Chains

This proposal reflects the common problem of interest games in the governance of PoS public chains. By comparing several public chains with similar mechanisms, we can better understand this issue:

1. Aptos: The current annual issuance rate is 7%, with plans to reduce it by 1.5% each year until it reaches a lower annual limit of 3.25% after more than 50 years. The staking rate is as high as 76%, but the on-chain fee burn has limited effect in resisting inflation.

2. Solana: Adopts a year-over-year decreasing inflation model, currently around 4.58%. The staking ratio is approximately 65%. A recently passed proposal eliminated some fee burning, redirecting it as rewards to validators.

3. Sui: The staking yield is relatively low (2.3%~2.5%) with a hard cap limit of 10 billion SUI. The staking ratio is approximately 76.73%, but there is no fee burning mechanism.

4. Cosmos: Staking returns of up to 14.26%, with a staking rate of about 59%. Despite the high returns, the price of ATOM tokens continues to decline.

The Choice of Aptos: Throttling or Open Source?

Currently, major PoS public chains are still seeking a balance between inflation rate and network participation. For Aptos, while considering "throttling" through AIP-119, it should also weigh its potential impact on the validator ecosystem and network decentralization.

Compared to aggressively cutting rewards, the more urgent choice at this stage may be how to "open source"—that is, to enhance network activity and attract more quality projects to settle in, thereby building a truly prosperous and sustainable ecosystem. This might be the key to supporting the long-term value of APT.

While addressing inflation issues, Aptos also needs to focus on how to enhance its network activity. Currently, Aptos's TVL is only $1.1 billion, ranking 11th among public chains, with a total of 149 validators and 495 full nodes. This data indicates that the Aptos ecosystem still has significant room for development.

Ultimately, Aptos needs to find a balance between controlling inflation and promoting network growth. Only by building an active and diverse ecosystem can it truly support the long-term value of APT and stand out in the fierce competition among public chains.