Cryptocurrencies
31
Oct
aptos

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What is Aptos? The Beginner’s Guide

Aptos is the most hyped new cryptocurrency of 2022. It is a technologically advanced smart contract platform backed by hundreds of millions of dollars from the industry’s most prominent VCs. This article is the Aptos beginner’s guide. We will go through the history, technology, and investment potential of Aptos.

Aptos is a smart contract platform

Let’s start by placing Aptos into the correct category in the world of crypto. As the title suggests, Aptos is a smart contract platform. Its categorization is therefore very easy.

Aptos aims to challenge all the major platforms in the industry, starting with Ethereum and Solana. It is also a direct competitor to other smart contract platforms, such as Cardano, BNB Chain, and Avalanche.

Smart contract platforms are operating systems for decentralized applications (dapps). You can think of them as being like iOS or Android. Therefore, Aptos does not compete with Bitcoin in any way.

The name Aptos can refer to the entire ecosystem, the project, or the smart contract platform. Its native token is also called Aptos. The ticker on the exchanges is APT.

The Aptos token is used to pay for transactions on the Aptos platform. As this is a Proof of Stake system, the APT token is also used for staking. In addition, its holders can vote on the development of the project (governance).

The Aptos project has its roots in Meta

Aptos is officially about a year old as a project, but its roots go considerably deeper. We can go all the way back to 2017 when Meta (formerly known as Facebook) launched its own cryptocurrency project. Many can still remember the cryptocurrency called Libra.

Libra was Meta’s idea for a stablecoin. It was launched to the general public in 2019. Libra contributed greatly to the brief cryptocurrency boom of 2019. However, this rally quickly fizzled out.

Libra came under fire from regulators in the US and Europe immediately after its launch. Many believe that the current regulation development was triggered by this event. Libra’s development caught politicians by surprise.

Meta faced a such backlash that its main partners began to resign. Meta still tried to save the project by rebranding it as Diem, but to no avail. Diem died for good in early 2022.

What does all this have to do with Aptos?

The Aptos project was founded in December 2021 by Mo Shaikh and Avery Ching. Both are former Meta employees. Avery Ching has held the role of Principal Software Engineer at both Meta and Yahoo, one of the highest positions in software development.

Mo Shaikh’s area was Meta’s strategic partnership. Below is an interview with the man from a couple of weeks ago.

Aptos will be able to build on the research carried out during Libra and Diem. It is also worth noting that some of Meta’s employees set up the Sui blockchain instead of Aptos. Sui and Aptos will likely end up competing for the same niche in the coming years.

Shaikh and Ching have assembled a team of around 300 people. Aptos Labs, headquartered in California, is responsible for the practical implementation. The project has its roots deep in Silicon Valley.

Despite its short history, Aptos has received significant investments from some of the best-known VC firms in the industry. The project raised $200 million in March 2022 and a further $150 million in July, led by FTX Ventures. Impressive sums for a project that didn’t even have a white paper published at the time.

Following these funding rounds, it has been reported that Binance has also invested a significant amount in the project. FTX and Binance are currently the most active players in the crypto industry.

Aptos TestNet was launched in March 2022 and quickly gained as many as 20,000 nodes as testers. The next version, Incentivized TestNet, was released in May. More than 30,000 applications were received for the role of 100 validators.

In mid-October (2022), a technically significant milestone was reached.

The production version of Aptos’ MainNet was released on the 17th of October. It should be noted, however, that many technical solutions are yet to be implemented. The APT token became available for trading on major exchanges two days later.

This article is being written just over a week after the launch of the MainNet. At this stage, there isn’t much more to say about the history and milestones of Aptos. We will update this article further as the project progresses during 2023.

The price history of the Aptos token is also too short to analyze in detail.

Aptos technology

Let’s look at the Aptos project from a technical point of view. This is the biggest selling point, with a blockchain capacity of a staggering 160,000 transactions per second (TPS). At least in theory. At this stage, Aptos is nowhere near these figures; only 4,200 TPS has been achieved on TestNet.

Like other smart contract platforms, Aptos uses a Proof of Stake consensus algorithm. Aptos also claims to have solved the blockchain trilemma. Its blockchain is scalable, secure, and decentralized at the same time.

In practice, Aptos had to sacrifice decentralization to achieve such scalability. Many other smart platforms have also had to resort to the same solution, even if they are decentralized in PowerPoint presentations.

PoS alone does not bring any advantage to Aptos. Its massive transactional capacity is made possible by parallel execution and a modular structure. Aptos can also batch transactions and separate certain operations from consensus building.

One of the key innovations of the Aptos blockchain is to decouple non-agreement related tasks out of the consensus phase, such as transaction dissemination, transaction execution and storage, and ledger certification.

The above quote is from the FTX Investor Report. You can also find more information from the Aptos white paper.

The technology described above enables lightning-fast transactions with very low latency. Aptos blocks are formed in less than a second. It can therefore challenge all the fastest and most scalable blockchains on the market.

Move programming language and dedicated processor

One of the special features of Aptos is the Move programming language. Move is based on the Rust programming language, which is used by the well-known smart platforms Near Protocol and Solana. This is also where we return to the history of Aptos. Move was originally developed for Diem.

Aptos has also built a brand-new processor for smart contracts. The word EVM is probably familiar to anyone who has read our guides. It is the world’s most famous smart contracts processor, the Ethereum Virtual Machine.

Many of Ethereum’s competitors have deliberately created an EVM-compatible blockchain. It allows easy cloning (transfer) of Ethereum applications, which can be used to attract Ethereum developers and apps to their ecosystem.

However, some platforms have chosen a different path, and Aptos is one of them. This path also requires the development of a dedicated smart contract processor. It is a very rare solution. Almost all competing options are either EVM-compatible or based on EVM in one way or another.

The video below compares the Move programming language to the Solidity programming language used by Ethereum.

Move is one example of the research and development work carried out during Libra & Diem, which Aptos is using. Meta had given its crypto project virtually unlimited resources. It is no wonder that technological innovations have emerged.

Move is also a very developer-friendly programming language – unlike Rust. This is one of the weapons Aptos is using to challenge Solana. Since Move is based on the Rust programming language, it is easy for Aptos to attract Solana devotees to its ecosystem. The threshold to learn Move is low.

In the Aptos programming environment, smart contracts are called modules.

APT token and staking

Like its competitors, Aptos uses the Proof of Stake consensus algorithm. This means that blockchain data is maintained by validators instead of miners. In addition, there are separate nodes on the network that store the Aptos blockchain.

Aptos-MainNet has 102 validators at the time of its launch. However, it is difficult to say how many entities are actually responsible for maintenance. How many of the validators are not under the control of Aptos in one way or another?

The picture below is from the Aptos white paper.

aptos nodes

The initial staking reward for Aptos is 7%, which is the annual rate of inflation. There is no upper limit to the number of APT tokens. However, the inflation rate will decrease over the years to close to 3%. Transaction fees are also burned.

The APT token, therefore, has two important uses: paying for transaction fees and staking. It is no different from its competitors in this respect. Native tokens from other platforms also play a similar role. Over time, governance is also likely to play a greater role.

It is possible to create your own tokens for the Aptos platform, as well as for competing platforms. The special feature of Aptos is that the creator of the tokens (called coins in the Aptos ecosystem) retains control over the tokens and can, for example, freeze them at will. This feature has probably been added to make Aptos more regulator-friendly.

Aptos as an investment

At the time of writing this article, we are going through the bottom of the bear market of 2022. It seems that nothing interesting has emerged in the crypto top 100 ranking list all year. If you don’t count the collapse of Terra Luna and UST-stablecoin.

Aptos is undoubtedly the most hyped new project. Its APT token had a market capitalization of just over a billion dollars immediately after launch. Does Aptos have potential as an investment or is the project all hype?

For a good and comprehensive analysis of the project, check out the Coin Bureau video below.

The strengths of Aptos are clear. It is undoubtedly an advanced smart contract platform. Aptos is theoretically the most scalable solution on the market. It does not even talk about blockchain infrastructure but wants to create a “monster” capable of running a global ecosystem.

The project is backed by the largest VC firms in the industry and two of the most influential exchanges. The pattern is very similar to Solana. Anyone can see for themselves the price development of the SOL token between 2020 and 2021. FTX and Binance both have the potential to create hype around Aptos.

On the negative side, the project looks a bit secretive and has communicated poorly. A good analysis of this can be found in the Coin Bureau video under Aptos Concerns. Even the tokenomics document was not released until a few minutes before the start of the trading. A lot of other essential information is still missing. Why?

The figure below shows the release of the APT token from the initial investors’ management.

aptos tokenomics

Investors should bear in mind that the market will be flooded with coins from the beginning of 2024. Until then, large investors will not be able to dump their holdings into the market, even if they wanted to. This does not apply to tokens that have been earned from staking rewards.

Aptos also has deep roots in California’s Silicon Valley, the so-called “big tech” sanctuary. Founded by people with a Meta background, Aptos also collaborates with Google and others. Many question how decentralized the Aptos platform really is. The project is the complete opposite of Bitcoin, for example.

Even if Aptos is in the lap of “big tech” and under the influence of FTX & Binance, there will be always hungry investors. Decentralization is a fine goal, but the lack of it has never held back investors before. If Aptos gets significant influencers behind it, the APT token could easily move to the top 20 of the crypto rankings.

It is difficult to speculate further at this point. The Aptos DeFi ecosystem is still evolving and the MainNet has been open for just over a week. We will come back to this topic in early 2023!

Aptos price and how to buy APT

The Aptos token is listed on the major exchanges in the market. The Binance exchange, a favorite of many, offers the best liquidity and the most trading pairs. It is probably the best place to buy APT right now.

Buy Aptos from Binance

Other reliable places to buy APT tokens are Coinbase and Kraken.

Several wallets can already be found for the Aptos token. A popular alternative is the Martian Wallet, which has been downloaded more than 600,000 times from Google’s app store.

The Aptos website can be found at aptoslabs.com. The official Twitter handle is @AptosLabs. Also, keep an eye on the Medium blog for updates.