Understanding Aptos (APT) for Beginners
If you’ve been following the crypto market recently, you may have noticed a newcomer climb quickly into the top 50 crypto projects by market cap.
Of course, I am talking about Aptos, also known by the ticker APT, which currently sits around 30th place by market cap.
Being released in October 2022, you could be forgiven for having never heard of this crypto project before reading this article. That is why today I am going to break down what Aptos is and what makes it unique.
What is Aptos?
Aptos is a new layer-1 blockchain created by Avery Ching and Mo Shaik, who had previously worked on Diem’s Novi Wallet. At its core, Aptos aims to be a scalable, safe, reliable, and upgradeable blockchain.
For those who don’t remember, Diem was the Facebook-funded crypto project originally known as Libra, a blockchain-based stablecoin payment network that began in 2019 and ended in 2022.
Aptos claims to be the spiritual successor to Diem and utilizes the Diem blockchain’s unique programming language called Move. Aptos also employs many former Meta employees who had worked with them on the Diem project.
Aptos also uses a Diem technique known as “parallel execution,” which I’ll come back to later but is essentially a method of increasing transaction speeds. This has led to its nickname as the supposed “Solana killer.”
But does it live up to the hype?
How does Aptos work?
Aptos is a Proof-of-Stake blockchain that uses the Byzantine Fault Tolerance, or BFT, to verify its transactions.
As we’ve discussed previously, under Proof-of-Stake those with the most deposited to the network are likely to be selected to verify incoming transactions.
The logic being those with the most invested in the network are less likely to try and cheat the system.
This is because the network has access to take away some of your deposited tokens should you be caught attempting to submit false transactions.
As there is always more staked than is on offer for verifying the transactions, it doesn’t make sense to fake transactions when there is always more to lose than gain.
However, if you would like a more detailed breakdown of Proof-of-Stake and how it works, I suggest checking out my previous articles.
What is the Byzantine Fault Tolerance?
On the other hand, Byzantine Fault Tolerance is the crypto-equivalent of the “Byzantine General’s Problem.”
The Byzantine General’s Problem is a thought experiment where you imagine an army attacking a city.
Many generals surround the city and they must communicate by messengers to decide if they should attack or retreat.
The problem is some generals are traitors and are actively working against reaching a consensus on whether to attack or retreat. So the question becomes, how do we ensure the loyal generals make the right decision when bad actors are trying to sabotage this goal?
This is similar to how blockchains work, as there are many nodes in the network who all must communicate with each other and must make a decision on if the information they receive is accurate or not.
Luckily, there is an algorithm that can solve this problem, providing that 2/3rds of the generals are loyal, which is the Byzantine Fault Tolerance.
It aims to ensure the correct answers are selected even when incorrect information has been submitted, either on purpose or by accident.
As blockchains get larger, it becomes increasingly difficult for 1/3rd of the nodes to be corrupted given their decentralized nature and being located all around the globe. But now we know how it works, what makes Aptos unique?
What makes Aptos unique?
As I alluded to earlier, Aptos’ most notable feature is likely a concept known as parallel execution.
While most blockchains track transactions in order, waiting for the previous transactions to process and update the entire blockchain as a whole, Aptos does things differently.
Instead of running one blockchain where all transactions are added one by one, Aptos discovered this process can be increased by running multiple parallel blockchains all at once.
These parallel blockchains all then link up back with the main blockchain, with the result being that congestion on the network is almost non-existent.
According to Aptos, their testnets have reached as high as 130,000 transactions per second. If replicated on their mainnet, it would make Aptos one of the fastest blockchains online.
For comparison, Ethereum currently handles around just 30 transactions per second. Of course, Aptos is only months old, so it will take some time before we know if all the hype is for real.
High transaction finalization on a testnet is one thing, but doing this reliable and consistently, especially when under strain from excessive user loads, on the live mainnet is another.
So what about APT’s tokenomics?
APT Tokenomics
Aptos launched with a supply of 1 billion APT tokens.
Of these 1 billion APT tokens, 51% went to the community, 19% to core contributors, 17% to the Foundation, and 13% to investors.
Of the 51% Community portion, 80% will be held by Aptos to help support community growth and Aptos Foundation initiatives.
The remaining 20% will be unlocked monthly over the next 10 years.
From the investors and core contributor portions, these funds are being released according to a four-year vesting schedule. This means these tokens cannot be dumped onto the market at once, which would likely lower their value.
At the time of writing, over 80% of all APT tokens in circulating supply were staked on the Aptos network, making around only 20% available for trading.
While there is much hype and even some myths regarding Aptos, how successful it will become is currently hard to predict.
Being so new, Aptos needs heavily road tested to ensure its security and performance, especially under increased user activity. Though, should it replicate its testnet performance on its live mainnet, it would seem like Aptos could be an attractive platform for developers and traders.
To this point, Aptos has raised more than $400 million from crypto funds like FTX Ventures, Andreessen Horowitz, Jump Crypto, a16z, Multicoin Capital, Dragonfly, Circle Ventures, and Binance.
The fact Binance, Circle Ventures, and Andreessen Horowitz, in particular, have shown interest is probably what has led to a lot of recent speculation and climb up the market cap rankings.
Given that these companies are some of the biggest players in the crypto investment game, it was only natural that some of that excitement would slip over to retail investors.