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

The Aptos community has recently been embroiled in intense debate over a proposal AIP-119 to reduce staking rewards. This proposal aims to alleviate the APT inflation issue by lowering the base staking reward rate, but it has also raised concerns about network decentralization and capital outflow.

The proposal suggests reducing the annual yield of Aptos from about 7% to 3.79% within three months. Supporters believe this will not only reduce APT inflation but also encourage users to invest their funds in other on-chain DeFi activities. However, opponents are concerned that this move could severely impact small validators, squeezing their profit margins and potentially forcing some validators to exit the network, thereby indirectly weakening the decentralization of Aptos.

Analysis indicates that the reduced staking yield may lack competitiveness, putting it at a disadvantage compared to other public chains that offer higher returns. This may lead to large holders and institutions transferring funds to other networks, reducing Aptos's TVL and liquidity. At the same time, the lower staking yield may also affect the attractiveness of Aptos DeFi protocols to liquidity providers.

In fact, the practice of suppressing network inflation by lowering validator yields has also been a source of similar controversies in other PoS public chains. For example, Solana previously had a similar proposal, which was ultimately rejected. This reflects the common problem of interest games faced by PoS public chains in the governance process.

Comparing the practices of several mainstream PoS public chains:

1. Solana adopts a dynamically decreasing inflation model year by year, with the current inflation rate of approximately 4.58% and a staking ratio of about 65%.

2. Sui has set a hard cap of 10 billion SUI, with a relatively low staking yield (2.3%~2.5%), and a staking rate of about 76.73%.

3. The staking yield of Cosmos is as high as 14.26%, with a staking rate of about 59%, but the price of ATOM Token continues to decline.

4. Ethereum has achieved deflation through the transition to POS and the destruction of base fees, but it has not led to a significant increase in Token prices.

Currently, no POS public chain can perfectly balance the inflation rate and network participation. For Aptos, while considering "throttling" through AIP-119, more attention should be paid to how to enhance network activity, attract quality projects to settle in, and build a prosperous and sustainable ecosystem. This may be the key to supporting the long-term value of APT.