Author: moonshiesty (moonshiesty@protonmail.com)
Discussion: GitHub Issue #587
Created: April 17, 2025
Summary
This AIP proposes a reduction in Aptos staking rewards by 1% per month over the next 3 months, targeting a new base staking reward rate of 3.79%. The adjustment is intended as a first step toward reshaping Aptos’ economic design to promote capital efficiency and sustainable growth across the ecosystem.
Motivation
Current staking rewards (~7%) are relatively high, creating a low-risk yield that discourages users from engaging in more productive or higher-risk opportunities like:
- Restaking
- Decentralized infrastructure (RPCs, Indexers, etc.)
- MEV opportunities
- DeFi protocols with real economic activity
Reducing the “risk-free” yield nudges participants toward these activities, improving network capital efficiency. At the same time, it aligns Aptos’ base rewards with other Layer 1 networks.
Risks & Considerations
Impact on Validators
Lower staking rewards will impact smaller validators disproportionately. Out of 100+ validators, 53 have less than 3M APT delegated. A community validator program (delegation support, grants) should be explored to maintain validator diversity and decentralization.
Impact on Ecosystem Incentives
This change reduces passive income for APT holders but opens up room to redirect incentives toward ecosystem participants such as:
- Protocol developers
- Active community contributors
- Liquidity providers
- New user onboarding
Tokenomics Overview
Most staking rewards today are captured by Aptos Labs/Foundation through grant delegation. For example:
- A validator with 10M APT at 7% APR and 7% commission earns ~49K APT/year
- Validator costs average ~$30K/year, leaving a large profit margin
This cost-free capital loop reduces competitive pressure and slows innovation in validator services.
Timeline
- Weeks 1–4: Community & Foundation discussion
- Week 5: Submit to mainnet governance
Further Discussion
Incentives for Validators
- Explore MEV/block builder APIs
- Reward validators based on performance, decentralization, and contribution
- Consider priority gas or base gas splitting mechanisms
Ecosystem Growth
- Redirect emissions to areas with real user engagement
- Support metrics like geographic validator spread, uptime, and active governance
- Explore next-gen economic models (Proof of Liquidity, restaking layers)
Let’s use this AIP as a stepping stone toward a more dynamic, efficient Aptos economy. Feedback and debate are welcome.
Join the discussion: [AIP-119][Discussion] Reduce staking reward rate · Issue #587 · aptos-foundation/AIPs · GitHub