Aptos proposes a 3% fall in staking rewards over 3 months to promote development.

A new governance proposal for the layer 1 Aptos blockchain suggests a fall in staking rewards from around 7% to 3.79% over the course of three months, with the goal of encouraging more active development on the network.

The AIP-119 proposal by Sherry Xiao – head of the product technical department at Aptos Labs (team behind the Aptos blockchain) and developer Moon Shiesty is working on the Mirage protocol based on Aptos and Movement co-authored.

"A decrease in staking rewards will encourage participants to seek opportunities that come with costs or risks but offer higher rewards compared to the safe staking yield," AIP-119 proposal states, while also pointing out potential opportunities such as restaking, DePIN infrastructure, and MEV.

Currently, the staking yield of Aptos is around 7%, higher than Ethereum's 3.1% according to data from Ultrasound.money, but lower than the approximately 15% that Cosmos offers to ATOM stakers. This yield is also close to the 7.6% allocated for AVAX stakers of Avalanche.

The authors acknowledge that the fall in staking rewards may affect the profits of smaller validators.

"If there are no compensation mechanisms like a strong delegation program, reducing inflation could cause small operators to be excluded from the network – weakening decentralization and long-term resilience," a node validator operator wrote in response to the proposal.

"I want to see the Aptos Foundation implement a delegated staking program with a staking pool model based on Solana's delegation program, to support small validators who have lost revenue due to this AIP proposal. I also hope that more Aptos validators will adopt alternative revenue models to compensate for lost income: RPC, MEV, transaction pools, organization, and data storage on the blockchain... These real staking profit sources are better for the ecosystem than the staking rewards coming from inflation," Shiesty shared.

Xiao also suggested that the Aptos Foundation should review current staking authorizations and remove validators that are not actively contributing to the network.

"Rebalancing the staking portion for active components and increasing participation will help better adjust the incentive dynamics, aligning with the goal of supporting the long-term growth of the network," Xiao wrote.

Previous Solana validators have rejected similar anti-inflation efforts

Aptos's proposal was made right after a similar measure, SIMD-228, was rejected by Solana's validators in March, during the largest vote in the history of this network. The proposal aims to replace Solana's fixed inflation rate with a dynamic model linked to the level of staking participation.

Opponents of SIMD-228 argue that this change could drive small validators out of the game, threatening decentralization — an argument that is also being echoed in the debate at Aptos. Both networks have high fixed costs to operate validators due to their complex architecture.

"SIMD-228 aims to stabilize inflation. The AIP, on the other hand, aims to fall the staking reward. The staking rate on Aptos has been quite stable so far, so I don't think stabilizing inflation is an urgent priority in the short term."

The authors of AIP-119 stated that they plan to gather community feedback over the next four weeks before submitting the proposal to the mainnet.

"Based on the current feedback, this proposal seems to have received a lot of support from the community," Shiesty said.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do their own research before making any decisions. We are not responsible for your investment decisions

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