You are reading an excerpt from our free but shortened abridged report! While still packed with incredible research and data, for just $20/month you can upgrade to our FULL library of 50+ reports (including this one) and complete industry-leading analysis on the top crypto assets. 

Becoming a Premium member means enjoying all the perks of a Basic membership PLUS:

• Full-length CORE Reports: More technical, in-depth research, actionable insights, and potential market alpha for serious crypto users
• Early access to future CORE ratings: Being early is sometimes just as important as being right!
• Premium Member CORE+ Reports: Coverage on the top issues pertaining to crypto users like bridge security, layer two solutions, DeFi plays, and more
• CORE report Audio playback: Don’t want to read? No problem! Listen on the go.

Core Report Economics

The Aptos blockchain’s economy is centered around its own native token, APT. APT, above all, serves as a staking and delegation token to secure the network. Validators stake the token on the network and/or receive APT tokens via delegation. Transactions on Aptos are also paid in APT, doubling the token as a gas token. This concept is no different than virtually every other L1 PoS blockchain network on the market.

The core reason to own (and use) the APT token stems from two areas: either directly in staking on the network to receive rewards or as a gas token to use the broader ecosystem. Otherwise, the APT token is similar to other cryptoassets in that it's a highly volatile, speculation-driven asset.

As of Q3 2023, APT holds a market capitalization of ~$1.5 billion across a circulating supply estimated to be 215.8 million tokens. There's no listed maximum supply. The valuation places the APT token within the top-40 assets by market cap in 2023. The all-time high USD valuation was $19.92 on January 26, 2023.

APT Token Launch and Distribution

Just after the project’s initial launch, parent company Aptos Labs reported raising approximately $200 million at a valuation of over $1 billion. The funding round was led by major venture capital fund Andreessen Horowitz and included FTX, Coinbase, Tiger Global, 3AC, and others. Immediately following this initial launch in March 2022, Aptos Labs announced in July that it had successfully completed its Series A funding round that was led by FTX Ventures and Jump Crypto. This round also featured investments from Andreessen Horowitz, Multicoin Capital, Circle Ventures, and other prominent VC firms in the industry. This round was estimated to have been ~$150 million and helped to double Aptos Labs’s valuation to $2 billion. Reportedly, Binance Labs announced their own investment in Aptos in September 2022 and, according to Bloomberg, raised the valuation of Aptos Labs to $4 billion at the time.

Token Distribution  

Prior to launching, there was no information about the APT token’s tokenomics or distribution. This glaring lack of visibility raised appropriate red flags throughout the community. The release of a blog post highlighting the token distribution did little to slow down the project’s criticism. Published data for APT reports that 1 billion APT tokens were minted at launch. Of these 1 billion tokens, 13% were set aside for seed funding round investors, while 51% were reserved for the Aptos community. The remaining tokens were split between the team (19%) and the Aptos Foundation for use in community funding, grants, projects, and other use cases (16.5%).

In total, Aptos and its investors control a massive 32.5% stake in the 1 billion minted APT tokens.

Source

However, it looks worse for token distribution when it's also considered that the Aptos Foundation not only controls 16.5% of the token supply outright but also controls the entirety of the community’s 51% as well. Thus, the Aptos Foundation is responsible for managing 67.5% of the 1 billion APT tokens. This was pointed out by Polychain. The majority of these tokens were simply staked at genesis, taking them out of circulation. This becomes a problem with distributed rewards. Rewards become unlocked as soon as they're earned, meaning that at a projected rate of 7% per year (via Aptos tokenomics estimations), a significant amount of tokens could be repeatedly sold on the open market by a small group of controllers. Only 2% of the outstanding tokens were airdropped to the public, meaning that there's a significant risk for anyone investing in APT after these investment rounds.

Percentage of floating supply controlled by team and foundation. Source: K33

Additionally, both investors and team members can use their staked allegations and sell rewards at will, essentially profiting from dumping APT tokens on the open market to unsuspecting retail investors. Overall, the distribution of APT tokens is highly centralized and is difficult to fully see on-chain due to the multi-wallet controller technology that allows a single owner to privately control as many public-facing wallet addresses as they please. The token raise was specifically designed to appeal to large investors. 

Source: K33

Supply Schedule

Although there were 1 billion APT tokens at genesis, there's no specified total cap on the amount of outstanding tokens that can exist. Data suggests that investors can expect the total supply of APT tokens to appreciate to 1.5 billion tokens over the next ten years. This is demonstrated by the anticipated visual supply schedule below:

Source

With the team, early investors, and the Aptos Foundation controlling 49% of the initial 1 billion APT tokens directly, this means the vast majority of these inflationary rewards will go to a very small minority of the overall Aptos ecosystem. For example, there are a number of listed ways in which the supply is anticipated to inflate. Staking rewards, for one, are split between validators and stakers with no restrictions on distribution. The reward rate, as mentioned above, is starting at a rate of 7% APY with a declining rate by 1.5% annually until it reaches a lower bound of 3.25% APY, which is expected to take 50 years. To reiterate, of all tokens minted at genesis, all but the circulating amount of ~162.8 million are held (either directly or indirectly) by three groups: the Aptos team, early investors, and the Aptos Foundation. Regardless, ALL of these tokens are eligible to be staked (Aptos states in their tokenomics article that ~82% already are), meaning that the vast amount of staking rewards will be going to these three groups for the foreseeable future.