With Solana in the gutter, and other Layer 1s struggling post-FTX collapse, this contender seems ready to swallow up the newly available market share.

That said, as experienced crypto investors know, we’ve heard this tale before…

“This Layer 1 is the next big thing! It's over for ETH, make way for the new king.” 

So, is it really the next big thing? Or is it just another massively overhyped project destined to fail?

With some rather suspicious tokenomics, there’s certainly a lot to cover before investing. Keep reading to find out whether we’ll be investing in this mystery token $XXX.

Disclaimer: This is not investment nor investment advice. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

TLDR

• Aptos is a new layer 1 blockchain. In January 2023, it boasted a fully diluted value of over $20bn. 
• We believe Aptos is benefitting hugely from the current relief rally and speculation from retail investors that alternative layer 1s will have their time to shine again.
• With the consistent innovation in the Ethereum and layer 2 ecosystems, we think the growth potential of alternative layer 1s is limited.
• What’s more, a deep dive into Aptos revealed some questionable tokenomics and damaging investments from FTX.
• Ultimately, we believe the project is overhyped, and we won’t be investing right now. If you hold $APT, your best option is to sell.
• We will, however, keep an eye on Aptos for future developments (and potential airdrops).

What is Aptos?

Aptos is a new layer 1 blockchain that utilises the Move Programming Language. Move is designed to update the ageing languages used by other blockchains. While it does make things a bit easier for developers, they already know how to work the old programming languages, and have resolved pretty much all issues. So is it necessary? Not really.

In November 2022, Aptos launched a testnet NFT. Shortly after the mint was complete, the blockchain announced that each minter would receive 150 $APT tokens (worth over $1,000 at the time). As with almost all airdrops, $APT’s price fell shortly after (due to selling pressure from those who received free tokens), but this was a win nonetheless. 

However, since then, we’ve seen an almost astronomical pump, with $APT peaking at $19.92 on January 26, 2023. That’s a 6.5X rise in under a month.

What’s more, on January 26, $APT boasted a fully diluted value (FDV: the value of all tokens that exist, including those that are locked e.g. team and investor tokens) of over $20bn. That’s higher than Solana, Polygon, Avalanche, Optimism, or Near!

So, what caused this massive pump? And where do we go next?

Why is $APT up 650%? 

A 650% increase in under a month is nothing to scoff at. Especially in the midst of a bear market (even with the rally we’ve seen). So what explains this meteoric rise?

We believe it’s a combination of the market’s January relief rally coupled with broad speculation from retail investors that alternative layer 1s are set to outperform in 2023.

Everyone wants to get on the next big thing, and after Solana’s performance last year, Aptos seems like a good bet.

Plot twist... 

We don’t think alternative layer 1s will return to their former glory.

With Ethereum’s upcoming upgrade, and Layer 2s undergoing rapid development, we just don’t see this happening. We’ve actually posited that the end of most other Layer 1s is a possibility in the next few years. 

What’s next for Aptos?

There’s an old saying – “if it ain’t broke, don’t fix it.” 

In Aptos’ case, “fixing” the non-issue of older programming languages and introducing the new Move language requires developing an entire ecosystem, moving away from the continually improving Ethereum and layer 2s.

Anything can happen in crypto, but we don’t see this occurring with Aptos.

The real kicker, however, are the project’s questionable tokenomics.

At first glance, Aptos seems to boast good tokenomics, with over 51% of the supply – and more than 510m tokens – going to the community (this is usually a good sign.) Of which, 20m $APT went to NFT minters as airdrops. Another 105m is unlocked and ready to support grants and growth initiatives, and the rest is set to unlock equally every month over 10 years for staking rewards.

Unfortunately, things don’t look so good when you look under the hood…

Staking rewards are part of “community” allocation (normally, these would be counted separately). 

Also, the foundation (the not-for-profit body that crypto projects set up to oversee their operations), investors and core contributors, whilst subject to a 4-year vesting period (meaning that tokens unlock gradually over 4 years), can stake their locked tokens the whole time.

The result of this is investors and team members take a significant portion of the “community” allocation in the form of staking rewards, which is very cheeky.

Oh, and by the way, FTX invested $350m into the protocol. These unlocks could be damaging, with around 6% unlocking per month from October 2023. 

Cryptonary’s Take

We will not be buying $APT right now. Aptos is massively overhyped, VCs are fiddling with statistics to take a large portion of the supply, and they got in low (which means you’ll get in high!).

The reason for this pump is a mix of misplaced hope and a relief rally. There’s not much more to it. 

Stay away from $APT.

Action Steps 

• There is nothing to suggest Aptos is worth its current valuation. So your best option is to sell any $APT you may have and wait for more development before considering the blockchain as sustainable. You may miss a 2X move-up, but the risk-to-reward ratio is much greater. Some of our team received Aptos’ airdrop. On this recent move up, they sold almost all of their $APT.

• As Aptos is young, all we can do is observe. If, at some point in the future, its fundamentals warrant more attention, we’ll be sure to update you!

• Remember, real winners solve real problems. If a project claims to solve an issue that doesn't exist, don’t invest.

• For now, keep up to date with the development of Ethereum layer 2s, especially Zero-Knowledge layer 2s. For more information on them, read our series here.