State of Aptos Q1 2024

Key Insights

• Aptos’ DeFi TVL increased by 376% QoQ to $573 million. Driven by incentive programs, lending protocol Aries Markets’ TVL grew by 714% QoQ to $249 million, becoming Aptos’ top protocol by TVL.
• The Aptos Foundation partnered with Jambo to launch the JamboPhone, a $99 phone that comes with Aptos ecosystem integrations, such as the Petra wallet and the Jambo App, a Web3 education platform.
• Protocol upgrades implemented Keyless and Passkey accounts, allowing users to create Aptos accounts and sign transactions via Web2 logins, passkeys such as Face ID, or other WebAuthn credentials.
• Kana Labs launched its Paymaster in mid-February, enabling entities to sponsor transaction fees on behalf of end users. The Paymaster sponsored 8.5 million transactions in Q1, around 21% of all Aptos transactions during that period.
• Aptos’s circulating market cap grew by 127% QoQ to $6.6 billion, ranking it 22nd among all tokens. With more supply unlocks occurring in the quarter, APT’s price increased by less than its market cap but was still up 76% QoQ.

Primer

Aptos (APT) is a Layer-1 blockchain designed around the core tenets of scalability, safety, reliability, and upgradeability. Aptos was born out of Meta’s Diem and Novi projects, eventually launching in October 2022. Core developer Aptos Labs raised about $400 million in two 2022 private investor rounds.

Aptos’ technological stack features many novel aspects, including the AptosBFTv4 consensus mechanism, the Quorum Store mempool protocol, the Block-STM parallel execution engine, and the Move programming language. Move on Aptos, which builds on the original Move language created by the Diem and Novi teams, offers enhanced flexibility and safety compared to other Web3 programming languages. Move on Aptos is being co-developed by multiple protocols.

Other key features aim to improve user experience and safeguards, including accounts where private keys are decoupled from public keys, transaction pre-execution to explain the outcome of a transaction before a user signs it, and transaction expiration time and sequence numbers. Development of the Aptos network and growth of the Aptos ecosystem is primarily led by Aptos Labs and the Aptos Foundation. For a full primer on Aptos, refer to our Initiation of Coverage report.

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Key Metrics

Financial Analysis

The crypto market continued its upward trend in Q1’24. APT was no exception – its circulating market cap increased by 127% QoQ to $6.6 billion. Its growth outpaced those with a similar market cap, as its market cap rank increased from 33 to 22 QoQ. With more supply unlocks occurring in the quarter, APT’s price increased by less than its market cap but was still up 76% QoQ. 

Aptos revenue, i.e., all fees collected by the protocol, grew by 37% to $475,000 but decreased by 10% when denominated in APT. However, Q4’s figure was driven by a spike near the end of December due to an inscriptions craze. Excluding that, Q1’s revenue totals in APT increased. Currently, Aptos burns all revenue generated. At the moment, these burned tokens have not significantly reduced inflation.

APT inflation began at a 7% annualized rate and will decrease by 1.5% each year until it reaches  3.5%. This yearly change occurred in mid-October, reducing the inflation rate to just under 6.9%. Note that this rate is based on the initial total supply of 1 billion APT. APT experienced other inflationary pressure coming from genesis supply unlocks. The genesis supply includes the 1 billion APT initially allocated but not staking rewards. By the end of Q1, almost 31% of the genesis supply was distributed, a 32% QoQ increase.

Another 4.7% of APT’s genesis supply is set to unlock in Q2’24:

• Team (42% of Q2 unlocks): Based on APT’s price at the end of Q1, $329 million will unlock to core contributors in Q2.
• Private Investors (30% of Q2 unlocks): Based on APT’s price at the end of Q1, $233 million will unlock to private investors in Q2, representing 3.5% of APT’s circulating supply at the end of the quarter. FTX Ventures participated in Aptos Labs’ first fundraising round and co-led its second.
• Ecosystem (20% of Q2 unlocks): Based on APT’s price at the end of Q1, $160 million will unlock to the ecosystem bucket in Q2, although these tokens will not necessarily be immediately distributed upon becoming liquid. Before any distribution, 80% of these tokens were held by the Foundation and 20% by Aptos Labs. These tokens are used for grants, incentives, and other initiatives. So far, just over 20 million APT from this allocation has been airdropped.
• Foundation (8% of Q2 unlocks): Based on APT’s price at the end of Q1, $66 million will unlock to the Aptos Foundation in Q2. The Foundation plans to use these tokens to host events, fund legal support, sponsor research, and more.

At the end of Q4, 79% of supply eligible to be staked was staked, a slight 6% QoQ increase. Note that locked tokens can still be staked and earn liquid staking rewards. In this case, the supply eligible to be staked is APT’s total supply rather than its circulating supply.

Network Analysis

Usage

Network activity, measured by transactions and active addresses, increased in Q1. Average daily transactions and addresses increased QoQ by 66% to 760,000 and 97% to 117,000, respectively.

Social media platform Chingari continued to lead Aptos smart contracts in activity, averaging 184,000 daily transactions in Q1. In mid-February, Chingari integrated Kana Labs’ recently launched Paymaster, enabling Chingari to sponsor transaction fees. From its launch to the end of the quarter, the Paymaster sponsored 8.5 million transactions, around 21% of all Aptos transactions during that period. Kana Labs received a grant from the Aptos Foundation in March to continue developing its Paymaster.

Despite increased transaction activity, the average transaction fee still decreased by 45% QoQ to 0.0006 APT ($0.007).

Average daily new addresses followed similar growth rates to transactions and active addresses, growing by 91% QoQ to 44,000. The weighted average one month retention rate also increased by 82% QoQ to 14%.

Security and Decentralization

APT staked fell by 5% to 861 million but grew by 68% QoQ when denominated in USD to over $14 billion. As a result, Aptos further secured its place as a top network by staked market cap. As noted above, locked tokens can be staked to earn liquid rewards. Considering that Aptos does not have a slashing mechanism, staking for the ~69% of APT’s illiquid genesis supply becomes a very attractive option.

Aptos active validators continued to grow, up 7% QoQ to 132. Around 21% of the validators accept in-protocol delegated stake, a feature that launched near the end of April 2023. Since AIP-50 was implemented in the 1.9.0 update, delegation pool owners have been able to change their commission rate after creating a pool.

The majority of stake for the other validators comes from out-of-protocol delegation from the Aptos Foundation and private investors’ locked tokens. The Aptos Foundation holds a majority of the total supply between its own allocation and the tokens on behalf of the ecosystem allocation. As such, it can help distribute stake rather equally among validators. As a result, Aptos has a Nakamoto coefficient of 21, up 17% QoQ, which is above the median of other networks.

Upgrades and Roadmap

Aptos is designed to support frequent protocol upgrades. This ability stems from validator management occurring onchain, allowing validators to easily sync to a new upgrade. Parts of Aptos are also written in Move, which can improve the time-to-market for developers.

The Aptos protocol continued upgrading in Q1 to 1.9.0 and then 1.10.0. These upgrade series implemented several Aptos Improvement Proposals (AIPs), with several aiming to ease user onboarding.

• Keyless accounts enable users to secure accounts using Web2 logins like Google, Github, or Apple via the OpenID Connect (OIDC) standard. Keyless accounts are application-specific, as they are bound by both the user’s OIDC account and the managing application (i.e., a dapp’s website or wallet’s mobile phone app).
• Passkey accounts enable users to secure accounts using passkeys, such as Face ID or Touch ID, and other WebAuthn credentials for transaction signing.
• AIP-52 also brought improvements to Aptos-sponsored transactions, automatically creating an account for a transaction signer if one does not yet exist.

Other upgrades from 1.9.0 and 1.10.0 include enhanced parallelism, reduced latency, and more.

One of the major network upgrades in development is a new consensus mechanism, Shoal. Shoal combines DAG and BFT qualities, reducing latency and increasing throughput. The Shoal paper was accepted to appear at the Financial Cryptography and Security 2024 conference, which occurred in early March.

In early January, Aptos Labs announced that it worked with OtterSec and MoveBit to formally verify the security and correctness of the Aptos Framework. The Aptos Framework is the set of Move modules that define core network functions such as the transaction cycle, staking mechanism, and Aptos Digital Asset Standard. The Move on Aptos decompiler shipped in March, allowing anyone to examine any Move bytecode as source code.

Ecosystem Overview

DeFi

Overall, Aptos’s DeFi TVL increased by 376% QoQ to $573 million. The increase was not solely due to APT price appreciation, as TVL also increased in APT terms by 170% QoQ. Furthermore, Aptos’s stablecoin market cap almost doubled QoQ to $97 million.

After the 1,529% growth last quarter, Aries Markets’ TVL increased by 714% to $249 million, making it Aptos’ top protocol by TVL. In mid-January, Aries launched an incentive program, distributing APT rewards to boost lending rates up to 30%. APT was also paid out to borrowers, enabling borrow rates to potentially become negative. Afterward, its USDC pool lending yield hovered between 15% and 25%, around 2-4x higher than the median stable yield across other top networks. When it launched the program, its TVL was around $29 million. Near the end of March, Aries introduced its ARIES points system, incentivizing borrow/lend activity and referrals. When this was announced, Aries’ TVL was $155 million.

Thala lost market share, but its TVL still increased by 26% QoQ to $151 million. Thala features a suite of DeFi products, including a CDP, an AMM, a liquid staking protocol, and a token launchpad. Thala also launched Snapshot-like DAO governance platform Parliament. The first proposal on the platform successfully sought to implement a THL buyback and burn with 100% of Thala DAO revenue. Other Thala updates from Q1 included Thala Swap going permissionless, the launch of its incubated protocol Echelon, and the introduction of THL-gated emissions.

After launching at the end of February, Cellana Finance reached $42 million TVL. Cellana is a DEX that employs ve-tokenomics to incentivize liquidity. It received a grant from the Aptos Foundation.

Other top protocols by TVL include Liquidswap ($58 million), Aptin Finance ($31 million), and Pancakeswap ($21 million).

Aptos’s average daily DEX volume grew by 512% QoQ to $10 million. Liquidswap led with almost $4 million average daily volume, followed by Econia at almost $3 million.

The opportunity cost of not staking is ~7% due to token dilution. As such, liquid staking protocols will be crucial for Aptos’ DeFi ecosystem to continue growing. Aptos’ liquid staking rate increased by 179% QoQ to 1.9%. Amnis Finance maintained its position as Aptos’ top liquid staking protocol with $166 million TVL. Amnis has been running a points program for the airdrop of its upcoming token.

Other DeFi-related events from Q1 include Ondo’s announcement that it will deploy on Aptos, the removal of limits on the AptosBridge and Stargate bridging incentives, Kana’s DEX aggregator upgrade and cross-chain swap launch, Superposition’s incentivized testnet launch, Panora’s rebrand from SwapGPT, and Mirage Protocol’s documentation release.

Consumer

Gaming

Gaming has been a core consumer-related focus for Aptos Labs and the Aptos Foundation. At the beginning of February, Aptos Labs released Aptos Roll, a module for onchain randomness. Developers can call an API to return instant, verifiable random values secured by the Aptos validator set via several cryptographic protocols. The Aptos Foundation sponsored Aptos RaNd0M Hack, a hackathon devoted to building with onchain randomness with $75,000 in prizes. Winners were announced in early April, with Zion Bets winning the first-place prize.

In February, Aptos Labs announced the Aptos GameStack, a comprehensive one-stop-shop for game developers looking to build on the blockchain. Aptos Gamestack combines game SDKs and APIs to allow developers to build, connect, and monetize games to the Aptos blockchain. Furthermore, Aptos GameStack was announced in conjunction with a partnership with Google Cloud, where GameStack would be sold through Google’s Marketplace.

The team behind METAPIXEL launched Aptos gaming studio Supervillain Labs in partnership with Aptos Labs. Supervillain Labs will launch metaverse Supervillain: Idle RPG, which will collaborate with several Aptos NFT projects as well as Intella X, NEOWIZ’s Web3 arm.

After partnering with the Aptos Foundation near the end of August, Netmarble’s Web3 subsidiary MARBLEX officially integrated with Aptos. The MARBLEX WARP Bridge connects Aptos to MARBLEX’s existing gaming ecosystem, including its MBX token and in-game NFTs. A Galxe campaign incentivized using MARBLEX on Aptos.

Across Asia, Aptos has also prioritized the Indian market, where they recently announced a partnership with STAN, an esports-centered trading card game where users can play, trade, and battle with their friends.

Other developments include the Aptos Tournament, The Anonz’s introduction, SHRIMP’s Galxe quest, and Undying City’s public beta launch.

NFTs

In Q1, there was $3.2 million in total NFT trading volume, a 28% QoQ increase. Of this volume, 74% occurred through marketplace Topaz, followed 11% on Wapal and 9% on Mercato. Wapal is an NFT marketplace for “pro traders,” similar to Blur and Tensor, which launched in Q3. Near the end of March, it released its NFT aggregator protocol. NFT aggregator Mercato launched its Mercato Mania campaign in February, which featured free and gasless NFT mints of numerous collections.

Other notable events included the expansion of the Aptos Art Museum, OKX’s Aptos Digital Asset Standard integration, Ice Blue’s mint, Arkpia’s announcement of Gabriel Hollington’s collection launching in April, Zaaptos’ mint, and Watcherz’ mint.

Development and Growth

Two Aptos-based projects announced funding rounds in Q1: Pontem and Jambo. Pontem is the developer of Liquidswap and the Pontem Wallet on Aptos. Pontem is also building Lumio, an Ethereum L2 framework that plans to enable smart contract development in Move, among other languages. It announced a $6 million round in January co-led by Lightspeed and Faction. As detailed below, Jambo is developing the JamboPhone in partnership with the Aptos Foundation. Waterdrip Capital announced a strategic investment into Jambo in March.

Aptos averaged 78 weekly active ecosystem developers in Q1, a slight 2% QoQ decrease. As highlighted in Electric Capital’s annual Developer Report, Aptos has one of the top developer communities among new, non-EVM networks.

Aptos Labs, the Aptos Foundation, and other organizations will look to continue this recent trend through developer resources and infrastructure as well as grants, hackathons, accelerators, and other initiatives.

Notable infrastructure and developer-related initiatives in Q1 include:

• Aptos Data Availability: The Aptos Foundation and Movement Labs are partnering to integrate Aptos Data Availability capabilities with the Move Stack. This partnership will enable rollups that use the framework to select Aptos as their data availability layer. Movement is building a Move-EVM Ethereum L2 as well as a shared sequencer.
• Move Revela: Verichains and Aptos Labs released Move Revela, a Move decompiler that enables developers to convert deployed bytecode back to source code. In doing so, users and developers can verify that smart contracts deployed onchain match up to published source code.
• CRED Integrations: CRED is an onchain graph built on Aptos. It integrated with several Aptos applications in Q1, including Econia and Aptos Arena.
• zkMe Partnership: The Aptos Foundation partnered with zkMe to integrate its ZK-based identity solution with Aptos.
• AIOZ Network Integration: AIOZ Network will bring its DePIN tooling to Aptos developers and integrate the AIOZ Network into the Aptos ecosystem.
• And more, including Tangem’s Aptos integration, Copper’s Aptos Foundation partnership, and the Move Security Guide.

Beyond the grants and partnerships mentioned throughout the Ecosystem section, Q4 initiatives include:

• JamboPhone: In mid-February, the Aptos Foundation announced a partnership with Jambo to launch the JamboPhone. The JamboPhone comes with Aptos ecosystem integrations, such as the Petra wallet, as well as the Jambo App, a Web3 education platform. At a $99 pricepoint, the phone is aimed to attract users in Africa, Southeast Asia, and Latin America.
• Aptos Assistant: The Aptos Foundation launched Aptos Assistant, an Aptos-specific AI chatbot powered by OpenAI technology.
• Daehong Communications Partnership: In early March, the Aptos Foundation announced a new partnership with Daehong Communications, Web3 subsidiary of South Korean retail conglomerate Lotte Group. Daehong Communications will integrate its ecosystem, including The Korea Football Association, Bellygom, and Choi Hye-Jin, with Aptos.
• Aptos Summit: The Aptos Foundation hosted a week-long Aptos Ecosystem Summit, bringing together ecosystem builders and investors. It also hosted the second summit, DeFi Days, in early April.
• SpringX Move Accelerator: SpringX launched the SpringX Move Accelerator in collaboration with the Aptos Foundation, ABCDE Highlight, and SevenX Ventures. Participants will receive grants, marketing support, networking opportunities, and other mentorship.
• MoveSpiders: In partnership with the Aptos Foundation, MoveSpiders launched its platform offering free Move programming courses.
• Galxe Quests: The Aptos Foundation conducted several Galxe quests in Q1, focusing on NFTs in Quest 3 and then DeFi in Quest 4.
• Seoul Aptos Experience: The Aptos Foundation introduced “The Aptos Experience”, an event in Seoul planned for September. The event will include interactive experiences highlight Aptos, one-on-one mentor sessions for builders, and networking opportunities.
• Data Partnerships: The Aptos Foundation partnered with several data providers in Q1 to improve data accessibility and transparency, including Dune, Token Terminal, Nansen, DappRadar, and more.
• Other notable developments include Alcove’s Move on Aptos Hackathon SZ, EasyA challenges, AngelHack’s learn-and-earn campaign, Aptos Developer Discussions, and OKX’s Cryptopedia series.

Closing Summary

The crypto market continued its upward trend in Q1’24. APT was no exception – its circulating market cap increased by 127% QoQ to $6.6 billion. Its growth outpaced those with a similar market cap, as its market cap rank increased from 33 to 22 QoQ. Aptos’ ecosystem continued its growth across multiple sectors. Its DeFi TVL increased by 376% QoQ to $573 million, partially driven by Aries Markets’ incentive programs. To improve support for gaming applications, Aptos Labs released Aptos Roll, a module for onchain randomness, and announced the Aptos GameStack, a one-stop-shop for game developers looking to build on the blockchain.

Further steps were taken to improve user onboarding and the overall user experience. Protocol upgrades implemented Keyless and Passkey accounts, allowing users to create Aptos accounts and sign transactions via Web2 logins, passkeys such as Face ID, or other WebAuthn credentials. Kana Labs launched its Paymaster in mid-February, enabling entities to sponsor transaction fees on behalf of end users. The Paymaster sponsored 8.5 million transactions in Q1, around 21% of all Aptos transactions during that period. Lastly, The Aptos Foundation partnered with Jambo to launch the JamboPhone, a $99 phone that comes with Aptos ecosystem integrations, such as the Petra wallet and the Jambo App, a Web3 education platform.

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