Why Slashing Aptos Staking Rewards to 3.79% Could Hurt More Than Help đ
#Amnis Finance, a major liquid staking protocol on Aptos, critiques AIP-119, a proposal to cut Aptosâ staking rewards from 7% to 3.79%. They argue itâs too drastic, potentially damaging validator sustainability, network decentralization, DeFi innovation, and Aptosâ appeal compared to other Layer 1s like Solana (6%+) or Ethereum (3-4%). Key risks include: reduced retail and institutional interest, a DeFi TVL collapse due to unprofitable strategies, stifled innovation, validator centralization, and capital flight to higher-yielding chains or even U.S. Treasuries (~5%). Instead, they propose a gradual reduction to 6% over three months (0.33% monthly cuts) to balance inflation control with ecosystem health.
I think Amnis makes a solid case. The 7% APR is a big draw for Aptos, especially as a newer L1 competing with heavyweights. Dropping it to 3.79% feels like pulling the rug out from under validators and DeFi users, risking a domino effectâless staking, weaker DeFi, and capital leaving for greener pastures like Solana or even traditional finance. Their analogy to national interest rates hits the mark: you donât slash rates in a growing economy unless you want to scare off investors. The gradual 6% plan seems smarterâeases the transition, keeps Aptos competitive, and avoids shocking the ecosystem. That said, the proposalâs intent to curb inflation isnât baseless; itâs just the execution that feels rushed. A middle ground makes sense here.
What do you think?
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