tickernerd-crypto-logo-dark
Account
Login
tickernerd-crypto-logo-dark
Login
Account

Issue #14: Ex-Facebook team launches high-speed “Solana Killer.”

Summary

SymbolAPTCirculating Supply (estimated)178,830,596
Rank (MCAP)#31Total Supply1,026,099,685
Price (03/15/22)US$11.99Market CapitalizationUS$2,138,256,779

Complete historical APT price chart. Source: CoinGecko

In this report, we’ll answer the following:

What is APT?

APT is a new layer-1 (L1) proof-of-stake (PoS) blockchain that had its genesis in October 2022. It aims to support an ecosystem of decentralized applications (dApps). 

An APT ecosystem lead announced that “Aptos is permissionless, no whitelist, and no approval from Aptos. Anyone who wants to build on Aptos can do so!”

The language Rust inspired APT’s language Move. It may be one of the first serious competitors to Ethereum Virtual Machine (EVM). 

Using Move helps bring investor interest to APT. It also helps differentiate the project from other L1 competitors.

Former Meta engineers created Move. Facebook had been developing a blockchain project called Diem. After the project ended, some associated developers left to make APT.

Some have dubbed APT the “Solana Killer.” High-speed L1 Solana (SOL) responded to APT’s competition by building a MOVE virtual machine. 

Aptos aims for extremely high speeds of over 160,000 transactions per second (TPS). Rapid dApp development, flexibility, and safety are also the primary focus. 

By using a parallel execution engine (Block-STM), APT can achieve high speeds. So far, APT boasts the highest time-to-finality (TTF) of any network.

Table showing APT’s lead in TTF relative to other popular networks. Source: @MessariCrypto on Twitter

It also uses a byzantine fault-tolerant (BFT) PoS consensus mechanism. This technology makes the network more reliable if transactions fail or usage increases.

APT is new but has seen some adoption. Many decentralized finance (DeFi) projects exist in the APT ecosystem. These projects include lending protocols, decentralized exchanges and liquid staking.

Overview of APT’s ecosystem. Source: @AptosInsights on Twitter

LayerZero Labs also launched the APT bridge. This bridge lets users transfer coins such as USDC, USDT and ETH from other blockchains.

How can you use APT tokens?

The APT token pays transaction fees in the APT ecosystem. All transactions cost a small fee.

Validators can also stake the APT token to earn rewards. By validating transactions, validators can divide rewards among themselves and their stakers.

Other users can choose to stake their tokens with more than one validator. At the end of each epoch, stakers and validators receive a pre-agreed split of rewards.

APT’s whitepaper plans to reduce staking rewards will decrease by 1.5% each year. This decrease will reach a floor of 3.25% yearly rewards. 

The APT token also provides voting rights in governance. Voters can weigh in on proposals that can change the network. For example, governance voters could change how staking rewards work.

Who’s behind APT?

Meta (formerly Facebook) was building a Web3 project called “Diem”. Mo Shaikh headed Diem’s team. He’s experienced in venture capital (VC), private equity and scaling products.

After Meta scrapped Diem in January 2022, Mo Shaikh created APT and serves as the project’s CEO. Avery Ching, also a former Diem team member, is APT’s CTO. Also, Aptos has 143 other employees.

Investors gave APT over $350 million in funding. These investors include prominent names like

How are APT tokens distributed and released?

APT launched by airdropping 20,076,150 tokens, or approximately 2% of its initial supply. It distributed these tokens across 110,235 wallet addresses.

The token allocations are:

APT token supply distribution. Source: Aptos Tokenomics Overview

Investor and core contributor tokens are vested over four years from launch. These groups hold 32.48% of the total supply.

APT’s anticipated token release schedule. Source: Aptos Tokenomics Overview

Why could APT be valuable in the future?

APT may solve the problem of L1 performance

After DeFi exploded in popularity in late 2020, performance became a critical narrative. Activity on Ethereum resulted in slow transaction speeds and high fees.

Developers launched many L1 networks to solve this problem. Yet, many of these new networks failed to gain traction or suffered from other issues. Some proved unreliable, while others failed to deliver under load. Some lacked the publicity to gain popularity.

APT could sidestep many of these hurdles. Its design uses a parallel execution engine (Block-STM). This technology helps the network be more reliable. It also keeps fees low and increases speeds.

Its connection to former Facebook developers also differentiates it from other L1s. This legitimacy makes the project appealing to VCs, who have invested significant amounts.

APT has strong VC backing and partnerships

Well-known names like Binance, Jump Crypto, Andreessen Horowitz and more have invested over US$350 million in Aptos. In September 2022, its valuation reached US$4 billion. These investments suggest some measure of confidence from knowledgeable investors.

VC backing can be a double-edged sword. Significant funding helps projects develop faster and with better talent. Big-name investors also bring attention to individual projects in the crowded crypto industry.

APT shares some resemblance to SOL, a competing high-speed L1. SOL also received heavy investment from VCs. Although SOL has had reliability problems, its price climbed over 25,130% around 2021.

Some speculate that this meteoric rise may have been due to manipulation by VCs. Since APT is similar, it could also have a large bullrun in the next bullish cycle.

Beyond VC investors, APT has also sought out significant partnerships. It’s integrated with Wormhole, Trust Wallet and Pyth. 

It also partnered with PancakeSwap (CAKE). This collaboration was CAKE’s first partnership outside the BNB ecosystem.

APT has attracted NFT traders

NFTs are a significant narrative in crypto that’s reached the mainstream. NFT collections Aptomigos and Aptos Monkeys helped APT’s price rally 565% during January 2023.

Since APT is a relatively new network, interest from NFT traders could help APT’s price climb in its early days. 

NFT traders often aim to become early adopters and flip their NFTs at higher prices. Traders also seem to have a positive experience with APT and plan to continue using the network.

A Reddit NFT trader praises APT after experiencing its ecosystem. Source: Reddit’s  r/CryptoCurrency subreddit

APT can generate hype as the “shiny new thing”

Among L1s, APT’s technology has some novelties. For example, parallel processing promises high speeds. APT’s Move language sets it apart from many competitors.

These differentiations could help siphon attention, especially in the next bull market. Crypto prices have significant fluctuations based on narratives. 

Connections to Meta and experienced leadership make APT an easier sell to investors. Novel technology helps generate hype. This increase in buying pressure can help drive the token’s price upward. 

What is the market saying about APT?

Investors are still discovering APT. Its total value locked (TVL) is relatively low at US$36.1 million. This amount isn’t surprising. After all, APT recently launched during a bear market when interest in crypto is low. 

APT total value locked (TVL). Source: DefiLlama

In comparison, SOL’s TVL is US$271.01 million. This difference reveals a larger market available for APT to capitalize on. APT’s growth could explode during the next bull cycle.

APT’s community has significant room for growth

APT also has a relatively small social media presence relative to the much older SOL. APT has

In contrast, SOL has

APT’s Twitter followers would have to increase by approximately 3,200% for it to catch up to SOL. It’s reasonable to expect APT to reach or exceed SOL’s community after a few years or a bullish market. Social growth at this level would likely help the token’s price climb.

Total social volume for APT. Source: Santiment

APT’s social volume peaked near its launch but began to pick up again during Q1 of 2023. This increase in social volume accompanies a surge in the token’s price. 

Watching for a rise in APT’s social volume charts could be an early sign of price appreciation. Since the token is new, there may be more fluctuations as investors search for fair value.

What are the risks for APT?

Unproven promises of high performance

One of APT’s claimed advantages is supporting extremely high speeds. Yet, this claim is unproven.

The team promised speeds over 160,000 TPS. So far, there hasn’t been enough activity to prove this claim. 

Aptos network statistics as of March 25th, 2023. Source: Aptos Explorer

As of March 24th, the network was only processing 7 TPS. The accusation that the network over promised and under delivered isn’t necessarily true. The network can process higher speeds but hasn’t yet experienced high volumes.

Investors should be wary that the claim of high speeds under high volume is unproven. Nonetheless, APT can likely support higher TPS under load than current statistics show.

Questionable core team

Others in the crypto community have questioned APT’s core team. The project showed some unusual behaviour, such as launching before releasing tokenomics information.

Also, Los Angeles entrepreneur Shari Glazer sued APT’s CEO Mo Shaikh in July 2022. She claimed that Shaikh defrauded her of 50% ownership in APT. According to Glazer, APT came from a consulting project she had with Shaikh, who then launched APT.

In October 2022, a court dismissed four of the claims. In December 2022, Glazer announced that she had resolved the matter.

Others claim that Shaikh launched the APT mainnet too early. They suppose this rush was to return VC’s US$350 million investment as the lawsuit took place.

Shaikh is a businessman. Many might consider these activities typical in the business world. Yet, this reputation might make some investors cautious.

Heavy venture capital backing

Project backing by venture capital can be a double-edged sword. Some projects have heavy venture capital backing, and it helps them succeed.

On the other hand, some VCs have destroyed projects to turn a profit. They often get tokens at cheap prices. Sometimes they sell large amounts of these tokens, crashing the price. 

VCs can also encourage backroom shenanigans. These types of activities collapsed the crypto exchange FTX in 2022. 

An obligation to VC commitments can also affect the project team’s decisions. They might force projects to develop in a way that turns a short-term profit for the investors. Long-term investors would hope instead that decisions support longevity and the community.

Only time will tell if APT’s VC backing will be positive or negative for the project’s other investors. 

Bottom line

APT is a promising project that may offer a robust solution for the problems plaguing L1s. It has strong backing from VCs, which may be a blessing or a curse.

The network has seen significant interest from investors. It’s also seen interest from traders even during the bear market. 

APT’s team has years of experience. Their connections with Meta help differentiate it from many other crypto projects.

Will APT become the next SOL – returning 25,130% to early investors in the next bull market? It’s too early to say, but the technology, team and narrative offer strong potential.

What can I do from here?

Who should I follow?

Sources

The information that Ticker Nerd provides is general in nature as it has been prepared without taking account of your objectives, financial situation or needs. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. Ticker Nerd is for information purposes only. Ticker Nerd is not responsible for any damages or losses that may occur as a result of reliance on this information. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.
Facebook-f Twitter Instagram
©Tickernerd - All Rights Resereved 2023
trust badge with ssl security