Aptos Considers AIP-119 to Halve Staking Rewards Amidst Support for Innovation and Concerns Over Validator Decentralization
The post Aptos Considers AIP-119 to Halve Staking Rewards Amidst Support for Innovation and Concerns Over Validator Decentralization appeared on BitcoinEthereumNews.com.
The Aptos community is actively assessing governance proposal AIP-119, which aims to significantly cut staking rewards from 7% to approximately 3.79%. This proposal has sparked debate, with supporters arguing it could foster innovation, while critics warn it threatens smaller validators’ sustainability and network decentralization. “Smaller validators might be pushed out,” cautioned Yui, COO of Aptos-based game Slime Revolution, echoing concerns within the community regarding the proposal’s potential impact. As Aptos explores proposed reductions in staking rewards, stakeholders debate the potential for innovation versus risks to decentralization in its governance structure. Aptos Eyes Trimming Staking Rewards to Fund New Initiatives The proposal AIP-119 characterizes staking rewards as a “risk-free” benchmark within the ecosystem, akin to conventional finance’s interest rates. The authors contend that the existing yield of 7% might be excessively high, leading to stagnant capital allocation rather than fostering growth and innovation. By lowering the staking yield to around 3.79%, the aim is to motivate users to engage in more dynamic economic activities beyond merely passive staking. This strategic shift is expected to catalyze demand for participation in various innovative projects, such as restaking, MEV extraction, and deeper involvement in DeFi. “I expect any lowered staking demand [to] be offset by the reduction in inflation from this AIP and new reward-generating opportunities launching in the next 6 months, and other sources of DeFi rewards,” noted Moon Shiesty on X. Aptos Total Circulating Supply. Source: X/Shiesty Furthermore, Shiesty indicated that the savings generated from reduced staking rewards could be redirected to support various initiatives, such as liquidity incentives and gas fee subsidies, particularly benefiting early-stage Layer 1 stablecoin programs. However, the proposed reductions in rewards have raised alarms regarding the viability of smaller validators. Operating a validator node incurs yearly costs ranging from $15,000 to $35,000, which could pose a substantial…
Filed under: News - @ April 19, 2025 12:16 pm