What is behind the rise of Aptos?

Author: Daniel Li, CoinVoice

The Aptos native token APT is undoubtedly one of the most eye-catching crypto assets this year. In the past month, its price has nearly increased sevenfold, rising from a low of $3.08 to a peak that once broke through $20.

The recent surge in APT can be attributed to multiple factors. On one hand, the crypto market is beginning to warm up, with an increasing number of supporters for various crypto projects. On the other hand, as the project party behind APT, Aptos has been a hot topic over the past year. Firstly, it has intricate connections with Facebook (now renamed Meta), and most of its founding team comes from the Meta Diem project.

Additionally, Aptos has pioneered many interesting features, such as its unique programming language Move, which has gained recognition from numerous investors; the development of the Block-STM smart contract parallel execution engine, which can effectively improve transaction execution efficiency, among others.

Aptos Global Tour in Korea - Kimchi Premium Effect Highlighted

The Korean market, as one of the hottest crypto trading markets globally, often sees crypto assets priced higher than in other countries, a phenomenon known as the "kimchi premium." The main reason for this phenomenon is the insufficient supply of crypto assets. With too many people in South Korea wanting to purchase crypto assets, prices have risen significantly. Moreover, South Korea is an energy-scarce country, and domestic crypto mining activities are not active, leading to a reliance on importing a large amount of foreign-mined crypto assets for trading. The South Korean government, concerned about the potential use of crypto assets for money laundering, has restricted the large-scale flow of related funds, further exacerbating the supply shortage and high prices of crypto assets in South Korea.

Reports indicate that over the past year, the prices of crypto assets in the South Korean market have been on average 10%-20% higher than those in the international market. The higher the premium, the greater the profit potential for investors. Coupled with a strong local trading atmosphere, the South Korean market has always been a battleground for crypto assets.

After the collapse of Terra, the local crypto market in South Korea experienced a vacuum, urgently needing a new protagonist. Aptos seized the opportunity to enter the Korean market. One detail that shows Aptos's emphasis on the Korean market is that Korean is the only language other than English in the white paper released simultaneously on the Aptos official website. Furthermore, the global tour hackathon Aptos World Tour Hackathon, which will be launched in 2023, will kick off in Seoul, South Korea, from February 1 to February 3, where core engineers from Aptos will participate in three days of hacking and demonstrations.

A series of actions by Aptos has also won favor in the Korean market. According to data from CoinGecko, of the $2 billion trading volume of APT in the past day, about half came from the Korean exchange Upbit's KRW trading pairs, with most of the funds engaged in arbitrage trading, buying low and selling high, thus boosting Aptos's DeFi trading volume. According to DeFi Llama, Aptos's DeFi trading volume has risen from $14 million last month to $51 million, and this figure is still rapidly increasing. The Korean influence has played a significant role in APT's price nearly increasing sevenfold in just one month.

Aptos Continues to Generate Buzz - Public Expectations Remain High

Behind the surge in the APT token, besides the warming crypto market and the push from Korea, the most important factor is that Aptos, as a star public chain, has continuously sparked discussions over the past year, and public expectations for it have generally increased, which is also a major reason supporting APT's sustained rise.

Star Project, Peak from the Start

As a public chain of the Meta system, Aptos has intricate connections with Facebook (now renamed Meta). Because of this connection, Aptos has attracted significant capital interest. In the seed round financing in March last year, the Aptos project was valued at $2 billion, securing $200 million in funding. By the end of July, Aptos completed another $150 million Series A financing led by FTX Ventures and Jump Crypto, bringing the total funding to $350 million. Compared to other Meta-affiliated public chains like Sui and Linera, Aptos has significant advantages in both financing scale and marketing, making it the best-developed and most eye-catching among the three.

Renowned Institutions Compete to Collaborate, Aptos Continues to be a Hot Topic

Over the past year, Aptos has not only won capital favor but has also attracted numerous renowned institutions to join the Aptos ecosystem due to its outstanding performance in community governance and ecosystem development.

In terms of infrastructure, shortly after the Aptos mainnet went live, Google Cloud announced a partnership with Aptos to launch an accelerator program. Google Cloud will support some of its validation nodes and other services, while the Aptos blockchain will be indexed and included in Google Cloud's BigQuery service. Additionally, Google and the Aptos Foundation will launch an accelerator program and co-host a hackathon next year.

In the gaming sector, Aptos has partnered with South Korea's AAA game studio NPIXEL, which has chosen to build its latest Web3 project METAPIXEL on the Aptos chain, marking an important step for Aptos in the gaming field.

In terms of payments, Aptos has collaborated with Web3 fintech company MoonPay to integrate the ecosystem project Petra. MoonPay will help users join the Aptos ecosystem through its system, starting with the digital asset wallet Petra, and this is expected to reflect in other projects on the Aptos network in the future, providing users with frictionless Web3 onboarding services.

In content generation, the decentralized streaming platform Livepeer announced integration with the Aptos network, allowing developers based on Aptos to utilize video streams supported by the Livepeer network. For creators, the integration of Livepeer and Aptos expands the scope and quality of Web3 creativity through decentralized streaming services—empowering creators even more!

Aptos's Rapid Development is Based on Strong Technical Support

Aptos's vision is to provide a blockchain capable of bringing mainstream applications to Web3 and to empower a decentralized application ecosystem to solve real-world user pain points. To achieve this vision, Aptos has undergone two major upgrades to its consensus protocol and core framework over the past year, along with a series of thorough improvements to its tech stack. Inspired by the Diem blockchain, it has made security, transparency, and frequent upgrades its core features. The rapid and robust development of Aptos is significantly supported by its strong technical foundation.

Simple yet Powerful Move Programming Language

Currently, there are three well-known programming languages for public chain development: 1. Solidity; 2. WASM; 3. Move. Compared to Solidity, Move is more flexible and convenient; compared to WASM, it is more specialized and secure.

Traditional transaction-based methods require corresponding transaction objects, necessitating the presence of both A and B addresses during transactions. To ensure that A does not "double spend" tokens, each transaction must be checked against all other transactions to avoid conflicts, which undoubtedly slows down transaction speed. Move's resource-based approach is entirely different; it does not record transactions from A to B but instead records the transfer of objects (or resources) and updates attributes accordingly. Importantly, resources are atomic entities— the existence of resource X does not depend on any other existing resources. Therefore, the Move language is very suitable for the characteristics of assets on the blockchain and is more developer-friendly for blockchain practitioners.

The core of Aptos is the Move language, and it can be said that most of Aptos's potential comes from this. The advantages of the Move programming language are mainly reflected in four aspects:

First, the Move programming language is derived from Meta's Libra stablecoin project, characterized by strong security and fast speed;

Second, the Move virtual machine supports parallel computing and parallel development, significantly improving blockchain operational efficiency compared to current sequential execution;

Third, the Move language implements asset-determined issuance standards, where issued assets are unique, and the entire chain tracks the assets, allowing the issuance standards to be upgraded accordingly;

Fourth, the Move language supports upgradable contracts, enabling smart contract upgrades without users being aware, greatly enhancing user experience.

Block-STM Smart Contract Parallel Execution Engine

The execution of smart contracts has always been a major bottleneck limiting blockchain throughput. Current blockchains either execute sequentially or require parallel sequential execution (i.e., without internal conflicts) to improve performance. Sequential execution does not scale well, limiting its throughput ceiling, while using a parallel execution engine faces the challenge of adjusting internal transaction conflicts and automatically adapting to workloads. Some blockchain parallel execution engines typically require users to pre-declare dependencies to address this challenge, but this severely restricts what transactions can do and may require interrupting or retrying transactions.

Block-STM is also a parallel execution engine, but unlike previous parallel execution engines, it is built around Aptos's software transaction memory and optimistic concurrency control principles. This new transaction parallel approach enables faster transaction processing without compromising the developer experience. During transactions, transactions are grouped into blocks, and each execution of a block must produce the same deterministic result. Block-STM further enforces that results are consistent with transactions executed in a predetermined order, dynamically detecting dependencies and avoiding conflicts during speculative transaction execution. The core of Block-STM is a novel, low-overhead execution and verification task collaboration scheduler.

Flexible Key Management and Transaction Transparency

Aptos accounts support flexible key management, including features such as key rotation, encryption agility, and hybrid custody models. Users can delegate the ability to rotate account private keys to one or more custodians and other trusted entities, then define a strategy through Move modules that allows these trusted entities to rotate keys under specific circumstances. For example, the entity may hold a kout-of-n multi-signature key shared by many trusted parties, thus providing key recovery services to prevent user key loss. Compared to other key recovery solutions such as cloud backups and social recovery, Aptos's key management solution is on-chain and more transparent.

In addition to flexible key management, Aptos also provides transaction pre-execution services during transactions to achieve transaction transparency, allowing users to visually see transaction results before signing. This transaction pre-execution service can be combined with known attacks and malicious smart contracts, significantly reducing the risk of fraud for users. Furthermore, Aptos allows wallets to impose restrictions on transactions during execution, and transactions that violate these restrictions will be terminated, further preventing users from being attacked by malicious programs.

Challenges Faced by Aptos

The star founding team, capital favor, and strong technical support have allowed Aptos to achieve rapid development over the past year, but behind its glory, there are still many hidden dangers.

Mainnet Launch Results Below Expectations, Triggering Public Doubts

The performance of the Aptos Autumn mainnet launched last October was disappointing. According to Aptos's official data, it claimed to achieve 100,000 TPS, but browser data showed that the Aptos network's throughput was only 4 TPS, far from the target. Moreover, most of these transactions were not actual transactions; they were merely validator communications and setting block checkpoints while writing metadata to the blockchain. The mainnet's operational speed falling short of expectations may lead to more risks in the future, such as some high-demand projects being unable to launch on time, and even if they do launch, user experience may be poor, which is extremely detrimental to Aptos's future ecological layout.

Ecosystem Yet to Gain Momentum, Lacking Competitive Projects

The success of an L1 public chain largely depends on the projects built on it. In this regard, Aptos has yet to establish its own advantages. Compared to the other two public chains in the Meta system, Aptos has a certain first-mover advantage in ecosystem development. However, due to the high similarity in technology, this may lead to multi-chain deployment and redundancy of ecosystem projects. Projects like Liquidswap DEX and Topaz NFT marketplace, while necessary products for any blockchain ecosystem, are not unique enough for Aptos's design. These projects are like a grocery store, school, and hospital in a small village; while necessary for the village's operation, they do not provide any unique characteristics that set the village apart from others. The lack of innovation and competitive projects is the most prominent issue facing the Aptos ecosystem at present.

Additionally, due to high overlap in technology, capital, and ecosystem developers with Solana, Aptos also faces competitive pressure from Solana. Furthermore, in terms of ecosystem layout, Solana has a more obvious advantage, boasting several competitive projects like StepN, which fully utilizes Solana's parallel advantages, bringing in a large user base and high transaction volume, as well as considerable revenue for Solana. At one point, StepN alone accounted for about 20% of Solana's paying users. Therefore, if Aptos wants to replicate or surpass Solana, it needs to find a series of unique projects that can fully leverage Aptos's parallel execution engine, and these projects cannot be completed on Ethereum or even Solana. This poses a significant challenge for Aptos.

Overvaluation and Excessive Speculation of Tokens

As a star public chain, Aptos has become a darling of capital since its launch. In the July 2022 financing round, Aptos was valued at $2.75 billion, which seems high given the bear market conditions. Excessive capitalization is not a good thing for the blockchain industry, which focuses on technological research and development, as capital often sacrifices long-term goals for short-term gains. Especially with the recent frenzy of buying in the Korean market leading to a dramatic surge in Aptos's native token APT, such astonishing increases may attract some speculators to short the token, causing extreme volatility, which is also very detrimental to the development of the Aptos project itself.

Conclusion

Aptos is currently the first and only L1 chain based on Move to launch its mainnet, giving it a significant first-mover advantage among the new generation of public chains. It represents the culmination of years of efforts by Meta engineers to address Ethereum's scalability bottleneck. Therefore, despite the many imperfections in Aptos at present, its future remains worthy of our expectations.