Aptos token launches to major dump, here’s why we saw it coming

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Aptos is the latest VC-backed Proof of Stake blockchain primed to replace Solana as the newest, slickest, highest-tech L1.

Last night’s launch of its native token APT went as expected, dumping almost 50% from its listing price in a matter of hours. Pre-earned insider rewards and a (very) last-minute airdrop announcement contributed to the chaos.

A spin-off from Meta’s seemingly stalled foray into cryptocurrency, Aptos boasts its very own programming language. According to Aptos’ official Twitter, Move has been “specially developed” for the chain, despite the project’s own whitepaper stating that “Move originated with the predecessor” (Meta’s Diem blockchain). The chain also boasts a novel transaction ordering system, known as Block STM.

As well as technical innovation, marketing has centered around other trusty retail-bait claims of security and high scalability, with the potential for over 100k transactions per second (TPS).

However, since Monday’s announcement of its mainnet going live, on-chain data has shown just 4 TPS, lower than that of the Bitcoin network.

Following the activation of the new chain, worries about the tokenomics of the accompanying APT token began to circulate on Twitter. Centralized exchanges (CEXs), such as key backer FTX, had announced the listing but details on the initial supply hadn’t been published by Aptos leading up to the launch.

Facing increased pressure, an official — though last minute — Tokenomics Overview was published less than 24 hours before CEX listings.

The brief summary explains that, of the one billion initial token supply, 51% will go to the “Community” and the remaining 49% to Core Contributors, Investors, and the Foundation. 

However, of these “Community” funds, “A majority of these tokens (410,217,359.767) are held by the Aptos Foundation, and a smaller portion (100,000,000) are held by Aptos Labs.”

While the statement also stresses that insider tokens will be locked up for at least 12 months and released gradually thereafter, it also gives away that locked tokens can be staked, and that staking rewards will not be locked.

The enormous quantity (490 million) of locked tokens, coupled with the fact that the “maximum reward rate starts at 7%,” means that a total of almost 100,000 tokens per day may be accessible to insiders, team members, and VCs to dump on retail investors buying on CEXs.

The article also contains the statement that “Mainnet was launched on October 12, 2022,” rather than yesterday as announced, meaning insiders have already been earning staking rewards for five days, ready to dump APT the moment listings went live.

Read more: What we know so far about Solana’s latest $8 million hack

Dumping staking rewards is an established and lucrative workaround for insiders or those with deep enough pockets.

When much-hyped Stargate Finance launched its STG token in March, Sam Trabucco, formerly of FTX-linked Alameda Research, admitted, “We did indeed buy all the tokens,” before committing to holding the tokens “for at least three years.”

The promise clearly didn’t extend to staking rewards, however. Over the last six months, Alameda has cashed out millions of dollars worth of STG to Binance or FTX as the token price has slowly bled out, currently down 90% since its early April peak.

It appears that Aptos is working from the same playbook as Solana, boasting the same backers and an almost identical value proposition. With this in mind, and given the traction Solana has in terms of technology innovation, it’s hard to escape the feeling that these chains are created purely to milk retail investors.

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