Hey hey, check this out! There is a new kid on the “block” and its name is Aptos. It’s the new shiny thing everyone is talking about.
Aptos crypto has the most social media engagement out of all the crypto projects launched in 2022.
In this article, I will walk you through what Aptos crypto is, how it works, who founded it and how it stands out against other layer 1 blockchains. I will also tell you what I think about investing in it. Let’s dive into it.
What is Aptos crypto?
Aptos is a layer 1 blockchain that prides itself in being extremely fast and scalable with no sacrifice to security and safety.
Aptos is going viral because it’s mainnet recently went live and because it is run by the same people behind Facebook’s attempt at a blockchain.
Moreover, Aptos gets a lot of attention because all the big VCs are investing in it including Multicoin Capital, a16z, Haun Ventures, 3 Arrows Capital, ParaFi Capital, IronGrey, Hashed, Variant, Tiger Global, BlockTower, FTX Ventures, Paxos, Coinbase Ventures and others.
One thing that distinguishes Aptos from other blockchains is that it takes a “principled approach to upgradeability.”
Let me attempt to explain what that smart-ass sentence means
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A principled approach to upgradeability
So, remember how recently everyone was extremely excited about Ethereum (What is Ethereum) managing to upgrade its consensus mechanism from Proof-of-Work to Proof-of-Stake ? This was years in the making and took extreme coordination from their developer community. Everyone applauded the successful transition. Well, according to Aptos, if Ethereum had taken a principled approach to upgradeability, the transition needn’t have been so challenging.
What they are saying is that Aptos is versatile by design. They take a principled approach in thinking about scale and security.
Remember, these guys were building a blockchain for an existing Facebook user base of billions of people. They needed to build something that would scale and adapt to circumstances. They were also extremely experienced at doing that in a Web2 world.
Before we understand what they’ve made let’s understand what they wanted to avoid.
What Aptos crypto did not want to become
Going back to the example of Ethereum.
The massive growth of the Ethereum Network led to a lot of problems.
The network got clogged, gas fees skyrocketed and layer 2 solutions such as Arbitrum and Polygon emerged.
But all of these additions just add more complexity to building and scaling things. The experience is fragmented.
As a programmer you now need to navigate this complicated stack of Jenga blocks and pray your code works. Given the complexity, you could be enticed to sacrifice security and safety for speed.
Also, why should something become more expensive if more and more people use it? Yes, that economics 101 class I took in college tells me that increased demand pushes prices up. But then this should cause supply to expand and bring price back down.
The problem is that supply did not expand fast enough as demand for Ethereum grew.
Aptos says that network effects should result in lower costs not higher ones. The blockchain needs to be malleable and adapt to new circumstances.
Let’s understand how Aptos goes about this.
How Aptos is different
When Facebook started looking at the blockchain space they weren’t satisfied with the available solutions. So they decided to build something from scratch.
And these guys went all in.
They built a smart contracting language called Move as well as their own blockchain that relies on a consensus mechanism that is the evolution of a respected protocol called Hotstuff.
They decided that their end-product would be a single entity that would function at the limits of high performance without needing to outsource processes to other systems to manage.
Their adaptable design means that it’s easy for them to push upgrades through. The end result is a safe, composable asset that developers can build on top of to create a new order of DeFi and other DApps.
In thinking about building for billions of users Aptos wanted to get two things right. The first is the User experience and the second is their blockchain’s ability to scale.
As far as the UX is concerned Move plays a critical role.
Move smart contracting language
Move is pretty cool. It’s a robust programming language that is comparable to Rust or C++ but it has inbuilt mechanisms that alert you if the code is buggy.
It also comes with something called a Move Prover which is a way for you to verify that your smart contract code works as intended. Hence, coding in Move reduces the chances of vulnerabilities and has the potential to attract developers to build on Aptos.
Another cool thing about Prove and Aptos crypto is that you can pre-verify transactions in a human readable way. For example, if you are about to send me something, you can see the outcome of how that smart contract will execute in a human readable way. This means you can know and check for yourself that what you intended to happen will actually happen.
Aptos’s makers say that Aptos’s crypto wallet will also be able to send you a warning if you are interacting with a contract that is dangerous. Just like how your get a warning from your Chrome browser when you visit a site that is not secure.
This will improve the experience so much more and reduce the number of scams especially for those who are more vulnerable.
Also, there are plans in the making for key recovery which is a common obstacle for most people to dip their feet into crypto.
Let’s take a look at the blockchain.
How the Aptos crypto blockchain works
This machine can manage high throughput with low latency while maintaining safety and security. The blockchain can manage 150,000 transactions per second which is pretty impressive and comparable to Solana. (Check out this explanation of Solana if you have no idea what that is)
Of course all this is in theory. The real test will come when there is commercial usage.
The reason Aptos manages to process transactions so fast is that it executes things in parallel. It takes what is called a pipeline approach to managing resources.
Think of it like this: there are different phases for consensus to happen: first you have transaction dissemination, then storing of transactions, and then execution and batch storage of ledger certifications. Each stage is executed in parallel and independently.
The biggest bottleneck in a blockchain is the transaction dissemination phase. Here every validator is talking to every other validator to ensure the state of the blockchain. So each validator will generate blocks of transactions and then those blocks are sent to other validators.
By decoupling the non-agreement related tasks and processing in parallel Aptos is able to achieve way more efficiency.
By the way I usually avoid jargon and acronyms but just FYI this solution is called Block-STM (check out their whitepaper for more on this). People are throwing the term around a lot so now you kind of know what they are on about.
Aptos’s founders understand that we are still very early in terms of infrastructure for Web3. The Web3 experience is very sub-par with those sitting outside looking in wondering what the big deal is about.
Focus on upgradeability
A key issue with blockchains is that they have been difficult to upgrade.
Currently all blockchains put together can’t do what a since mySQL server can do.
As the space evolves and new ideas emerge Blockchains will be able to do more funky stuff. And this is why Aptos say their focus is on upgradeability.
One reason they can achieve this, is that they store the configuration for the blockchain on the blockchain itself. This means they can deploy new frameworks with no downtime. The ability to roll out code quickly and reliably should eventually give them a competitive advantage .
Aptos has also introduced light clients. These are nodes that allow anyone to verify the state of their data without needing to compute all of the transactions from the beginning or needing to trust a 3rd party.
The team behind Aptos crypto
Aptos was founded by Avery Ching and Mo Shaikh. Avery is the CTO while Mo is the one who brings people, funding and partners together.
When Facebook decided to become involved in Web3 it took a progressive approach and made their code open-source.
Yes, this meant that anyone could launch an L1 like theirs but, really, this is the equivalent of revealing the blueprint for a nuclear power plant.
In order to make it work you need capital, assets and a strong team. And Aptos has a really strong team.
The team comprises 30+ people with PhDs in consensus, cryptography, distributed systems, formal verification and security. The codebase has grown substantially over the past three years with over 290 unique developers and community-driven improvement proposals.
So is Aptos a good investment?
I knew you would ask that!
Look I understand. You want in on the new shiny thing. Problem is but there is no proper answer to that question. It really depends on your perspective and the level of speculation you are willing to accept.
I, for one, am not investing. But, on the other hand, I am probably “Not Going to Make It” either.
But let me provide you with some insight that might help you make a decision.
Let’s compare market caps of Aptos vs. other coins
Aptos has a market cap of over $1Bn and a fully diluted market cap of $9Bn. In terms of market cap it’s on par with projects like Aave, MakerDAO, Fantom and Helium.
If you believe in the Aptos vision then you might argue that it needs to be compared to major platforms like Solana. Some people are calling Aptos a Solana killer.
In fact many people look at Solana when it launched and see that SOL grew 100x in price and are hoping for the same for APT (Aptos’s token).
The problem is that it looks like EVERYONE is thinking along the same lines and the price of APT is already high.
Solana has a fully diluted market cap of $17Bn so if you think that Aptos will reach Solana then Aptos can only 2x from here at most. However, if it reaches Ethereum, which has a fully diluted market cap of $200Bn, then Aptos could grow 22x.
The problem is that all of this speculation emanates from the hype around the technology, the team’s background and the stamp of approval given by VCs. There is nothing actually live yet.
This is the equivalent to buying tokens for a theme park that doesn’t yet exist. The investors and builders of the theme park are of high caliber and promise amazing results and but you are still taking a bet given that nothing has been built.
You are betting that this theme park is going to be so impressive and have so much demand that you will be able to sell your ticket for a significant profit.
In terms of drawbacks to watch out for, Aptos has received hard criticism for its token launch.
The 50% of tokens that is meant for the community is held by the Aptos Foundation. Also, while there is a lock on investors’ tokens for 12 months, they can still earn and withdraw staking rewards which seems unfair.
There are also some concerns around transparency. During their mainnet launch they closed their Discord channels for a few hours.
On top of that, this YouTuber complains that Aptos hid a thread on Twitter that criticized the launch.
Finally, like many crypto projects at launch the project is nowhere near achieving decentralization. The $350Mn that VCs have invested will go towards building DApps and tools but effectively the VCs and team are running the show. Adoption has a still long way to go.
Concluding remarks on Aptos
Aptos came late to the party. It is not one of the original gangstas. Despite its late start it has advantages in terms of how it was born and the talent it was able to attract.
Time will tell if Aptos will be able to build any network effect. With blockchains such as Ethereum, Solana and Cosmos having built out large ecosystems it remains to be seen how many differing standards will be feasible in Web3.
When asked how Aptos crypto will be able to make a wedge in the market, Mo says that its their focus on upgradeability and their unrelenting attention on being able to scale to billions of users with a superior user experience to what is currently available.
The early signs are positive. During it first test net 20,000 nodes launched without any hiccups. In June they were able to mint 2Mn NFTs in an hour. Plus, they already have about 200 projects building on their platforms including DeFi protocols such as AMMs and a bunch of gaming.
To Aptos’s critics and those who compare Aptos with other newcomers such as Sui, Mo says pay attention to what is upgrading aggressively. This grants assurance to developers that they won’t need to scrap and rebuild somewhere else.
I’ll be keeping a close eye on Aptos to see how they maneuver in this space. If you want to stay in the loop follow me on Twitter at @lementalcrypto.