After the sunsetting of Meta’s Diem and Novi projects, Aptos Labs emerged on the scene with nearly $400M in funding to create Aptos—a high performance Layer 1 blockchain at consumer-grade scale. It differs from other networks through several technological improvements, including its Block-STM parallel execution engine, Quorum Store mempool protocol, and integration of the Move programming language. The blockchain prioritizes low latency and high throughput to create a sandbox for innovation at the speed of the modern world. Core developers of the blockchain also prioritize seamless upgradability, evidenced through 78 Aptos Improvement Proposals (AIPs) since launch, as well as constant performance benchmarking tests to ensure scalability. While the majority of TVL in DeFi today sits on Ethereum mainnet and is spread across several L2s, we expect to see a shift toward faster chains to support the workload of the global economy. 

Technical Architecture

Aptos is a delegated proof of stake system, where nearly 80% of circulating supply is currently staked across 135 validators. Core components of Aptos’ novel pipelining architecture include the AptosBFT v4 consensus protocol, Quorum Store, and the Block-STM parallel execution engine. 

Aptos utilizes AptosBFT v4 for consensus, which is a modified version of Jolteon that can reduce latency seen with Hotstuff (used in Tendermint) by up to 33%. AptosBFT v4 iterates on Jolteon adding leaders’ election based on reputation, which combines both stake weight and performance. In addition, latency is reduced further, by introducing a PBFT style pattern of communication into Jolteon. Instead of using leaders as relays, validators communicate directly utilizing the peer to peer connectivity..

Aptos Labs introduced Quorum Store to enhance Aptos’ consensus mechanism through the separation of data dissemination from transaction ordering. Quorum Store takes transactions from the mempool to be ordered into batches, which are then broadcast to validators, who can share them in parallel with others. When a batch receives signatures from at least ⅔ of validators, Quorum Store creates a proof of availability, indicating that a batch is ready to be proposed for consensus. Quorum Store reduces the workload of leaders, as they no longer need to ingest raw transactions from the mempool. Instead, they can create blocks using certified batches from Quorum Store. 

This greatly reduces the amount of data in messages and more efficiently utilizes resources of all validators in the network, instead of encouraging mismatched workloads between validators and leaders. A major benefit of Quorum Store is that it adds a degree of horizontal scalability to the system. As loads increase, more machines can come online to run Quorum Store and assist with data dissemination. Quorum Store further enhances the network through a concurrent memory cache that allows Aptos’ execution module to read data from Quorum Store in parallel.

The network’s Block-STM execution engine enables high performance through a modular approach to transaction processing, where transaction dissemination, block ordering, transaction execution, storage, and verification all occur simultaneously. Block-STM utilizes optimistic concurrency control, a key differentiator when compared to Solana and Sui’s pessimistic concurrency. Optimistic concurrency, also referred to as “dynamic parallelism,” assumes upfront that transactions interacting with the same piece of state will not collide. If they do collide, transactions can be reincarnated. Memory access and modifications are calculated at runtime. On the other hand, pessimistic concurrency assumes that two transactions will touch the same piece of state at the same time and must dictate that one must process completely before letting the other transaction finish. 

For this reason, systems like Solana and Sui require that a developer specify every possible account that a transaction may touch in a system, which can lead to increased complexity in transaction processing and smart contract development. When thousands of transactions are executed at scale within an onchain orderbook, pessimistic concurrency could possibly result in more redundant transactions and lower throughput due to false conflicts. Aptos’ optimistic concurrency touches on the idea of code minimalism, where the complexity of instructions can be shifted from the developer to the runtime. Developers do not have to declare all possible addresses that may be affected up front, and transactions can truly occur atomically within one block. 

Together, AptosBFT v4, Quorum Store, and Block-STM create a high-performance distributed system that has been shown to support up to 30k TPS in a mainnet-like environment. More importantly, Aptos could support a sustained TPS of 25k and up to 2.1B P2P transactions in a 24-hour period in the same mainnet-like environment. For reference, Solana today processes around ~2,500 TPS (including vote transactions) on average, albeit with significant bottlenecks in transaction scheduling that has led to degraded performance throughout the latter half of Q1. As a result, the user experience has suffered, and transaction failures have become more frequent. For a more in depth discussion of Solana’s recent scaling issues, be sure to read our report. Aptos’ design positions the platform as having a competitive advantage over other high performance blockchains. 

Moving the Industry Forward

Aptos’ native Move programming language grants the platform several advantages over other smart contract platforms that are usually limited by general-purpose programming languages such as Solidity, JS, or Rust. This is not by accident, as Move originates from a proprietary language tailored for blockchain development at Meta. Move is an object-oriented programming language that prioritizes security, code minimalism, and efficient resource usage. Move’s design prevents several errors that are often found in Solidity, such as double-spending and reentrancy attacks. Move circumvents reentrancy attacks through its resource model, where a resource can only be accessed by a single set of instructions at a time. 

Since it is a single threaded language, Solidity utilizes sequential processing, which severely limits smart contract capabilities. An example of this would be a scenario where a fast food restaurant only has a single cashier to process orders and transactions of a long line of people. Move was designed for parallel processing, where multiple sets of instructions can be executed at the same time across different threads. In the aforementioned scenario, Move would be equivalent to a fast food restaurant having 10 automated kiosks that allows customers to input orders and pay for their food. Move utilizes a linear type system that grants it several benefits over general-purpose programming languages in the context of smart contract development. This system has native features for formal verification and security that prevents developers from deploying contracts with errors. The linear type system also benefits smart contract development by mandating more efficient memory management. 

As mentioned earlier, Aptos excels in its upgradability. Core contributors to the Aptos network are continually improving on the Move language to streamline smart contract development. The Aptos Compiler introduces several advancements that enhance the developer experience, including receiver-style function calls, first-class higher order functions, user defined abilities, and resource access control. Receiver-style function calls allow functions to link easier with their targets, which lets developers create more efficient code. Higher order functions support advanced function types that grant developers more flexibility in creating full applications. To supplement this, developers can also customize traits for types in move, resulting in a more composable environment. Resource access control bolsters security by allowing developers to explicitly restrict which resources that a function or transaction can alter. These upgrades will have a broader impact on development capabilities as Move adoption grows. 

Aptos’ Move Prover (MVP) provides an extra layer of verification for Move code through its ability to automatically validate smart contracts, as well as help detect bugs. In layman’s terms, the Move Prover is a tool that provides additional assurance that a smart contract is functioning how it was designed to. The MVP operates on Move bytecode, which prevents compiler bugs from interfering with prover correctness. Another advantage of the MVP is that it can verify smart contracts in a matter of minutes, giving developers easily accessible confidence that a smart contract is safe to interact with. Given Move’s tailored design for blockchain environments, Aptos developers should have an easier time focusing on their actual products, instead of being bogged down by complicated code and security concerns. 

Finally, Aptos is building a new Move compiler that makes it much simpler to make language changes that are also immediately supported by the Move prover. A new MoveVM is also being built to improve the runtime by up to 10x faster with data loading caching and a zero-copy architecture as well as runtime debugging.

Simplifying Web3 Access

In today’s Internet era, users commonly use Web2-style logins—such as email, Google or Facebook accounts—to access websites and applications. Authenticating user identity with FaceID and TouchID has become commonplace as well as a quicker and simpler alternative to entering a lengthy password. To bring this simplicity to Web3, Aptos Labs has introduced key innovations that remove barriers, such as mnemonics, for today’s internet users.

Aptos Keyless (AIP-61) revolutionizes the Web3 user onboarding and identity experience by matching an OpenID login against a blockchain account using a zero-knowledge proof. Keyless accounts on Aptos are secured through a user’s existing login (e.g. Google, Apple or Github accounts) rather than a difficult-to-manage secret key, enabling native logins to any application on any platform. In a nutshell, Aptos Keyless means “your blockchain account = your OpenID account.”

Similarly, Aptos Passkeys (AIP-66) makes entry points to Aptos as simple yet safe as FaceID or TouchID. Instead, Passkeys enable a user to seamlessly onboard into Web3 by offering a solution to create and recover an account without relying on plaintext mnemonics or private keys. Doing so means users no longer need to set up lengthy passwords and can sign transactions with their Passkeys to simplify the login process. 

Why High Performance Chains?

Aptos’ architecture makes it a perfect fit to support a new generation of high performance dApps, beyond the circle of forked derivatives of pre-existing EVM products seen on other chains. This architecture gives Aptos three primary advantages over other networks:

1. High throughput
2. Low transaction fees
3. Security

High throughput means that Aptos can process greater TPS than competitors, enabling the network to support fully onchain orderbooks, such as Econia, to power spot/derivative markets and lightning-fast oracles, such as Pyth. Orderbooks must be able to support both trade settlement and matching, which is not feasible on Ethereum or L2s, mainly due to Ethereum’s 12 second block times and ~13 minute time to finality, whereas Aptos boasts a finality time of less than one second. Low transaction fees open an opportunity for both DEX and cross-chain aggregators to thrive on the network. An aggregator on Aptos, such as Panora, can execute through multiple liquidity pools and trading venues to find the most efficient route for a trade. Such a transaction would likely cost hundreds of dollars to be executed on Ethereum, but Aptos could execute this transaction for fractions of a penny, not dollars. High performance primitives must be resilient in the face of transaction spam, and this is precisely why architecture like the Block-STM execution environment and Quorum Store exist. 

Low transaction fees and high throughput also position Aptos to host gaming, consumer and AI applications that require the ability to handle much larger transaction loads than most blockchains can support today. Further, sponsored transactions were built directly into Aptos’ core protocol with the implementation of AIP-39, meaning that users can interact with dApps without ever needing to download an Aptos wallet, managing a seed phrase, or paying transaction fees. Aptos’ validator architecture grants flexibility in the creation of dApps that could offer innovative staking services through restaking, and high-yield LSTs. 

To further add to Aptos’ competitiveness, Move provides a robust and secure programming language that can serve as a preventative measure against malicious actors. Chainalysis’ Crypto Crime Report reported $1.7B in hacks in 2023, showing that the industry has much more work to do. As more exploits continue to occur in DeFi, the advantages of Move will only continue to become more apparent. With larger TradFi players, such as Franklin Templeton and Blackrock, entering the crypto market, they will need a secure foundation to bring hundreds of billions of capital onchain. It is likely that platforms that rely on Move will serve as a flagship destination for the tokenization of RWAs. 

Aptos Ascend is a program in collaboration with Microsoft, SKTelecom, Brevan Howard, and Bain that exists to create custom solutions for secure tokenization. Through Aptos Ascend, tokens can be highly customized through access controls, zk-enabled privacy, conditional transactions, and automatic revenue collection. One can think of Aptos Ascend as the out-of-the-box tokenization solution that helps traditional entities focus more on product, rather than smart contract development, security, and compliance. The inception of an institutional-focused product significantly differs from other blockchains’ strategies, who tend to move with a “build it and they will come” mentality. Instead of leaving the burden of development on traditional entities, Aptos has spun up a dedicated branch that provides the same white-glove assistance one would expect when implementing a product like AWS or Salesforce. Aptos’ dedication to GTM activities will likely position the network as a leader in the adoption of new users and capital flows. 

Aptos Network Metrics

Aptos’ reliance on Move served as a formidable barrier to entry for developers in the first year of mainnet; an issue that contributors anticipated, which explains why there has been an abundance of Move-focused developer documentation and events over the past year. However, Q1 brought new momentum to the ecosystem, evidenced by a nearly 500% increase in TVL from $130M to $493M in just four months, as well as a steady average of ~120,000 daily active addresses (DAAs). Although Solana leads the Alt L1 sector in both TVL and DAAs, it is interesting to note that Aptos boasts the second highest DAAs in the Alt L1 sector. 

Considering that Solana has been live on mainnet for four years, while Aptos has only been live on mainnet for a year and a half, early signs of adoption show that Aptos has considerable growth potential at this stage. In fact, roughly one and a half years into Solana’s mainnet, the network saw breakout adoption metrics, indicating that Aptos is following a similar adoption trajectory. One catalyst that could flip the switch for Aptos adoption is retroactive airdrops to stimulate economic activity on the network. In October 2022, Aptos airdropped 23,454,750 APT to early adopters, which is only 4.6% of the total 510.2M APT (51% of total supply) that was allocated to the Aptos community in the initial tokenomics framework. A future APT airdrop, paired with retroactive airdrops of promising dApps, could lead to a surge in attention and volume to the network. 

Aptos DeFi

DeFi on Aptos has grown significantly over the past quarter. With $139M in TVL, Aries Markets is a margin trading platform that allows users to borrow, lend, and trade using Econia’s hyper-parallel onchain orderbook and Pyth’s low-latency oracle infrastructure. Aries recently launched a points program, which will likely be convertible to a retroactive airdrop at some point in the future. In April, the dApp introduced efficiency mode, which lets traders access leverage with up to 90% LTV. An integration with liquid staking protocol Amnis Finance also enables users to collateralize liquid-staked APT in trades, unlocking capital efficiency through stAPT’s ~10% annual staking reward. Amnis also has a points program, creating a system where a user can utilize both Amnis and Aries Markets at the same time, qualifying them for at least three airdrops at once. Other liquid staking protocols include Pontem Network and Thala Labs.

With margin trading and liquid staking unlocked, another dApp that has seen significant traction through Q1 is perpetual futures protocol Merkle Trade. The platform has seen a cumulative $7B in trading volume with only $4.8M TVL, showcasing how Aptos’ design enables unmatched capital efficiency. In March alone, Merkle Trade saw $1.8B in volume, $958k in fees, and 38k traders. The dApp utilizes MKLP for liquidity, which is a similar model to GMX’s GLP. Users can deposit stablecoins to mint MKLP and provide counterparty liquidity to traders. MKLP currently yields 79% annualized, and has increased from $1 to $1.38 over the past four months. Merkle specializes in quickly listing long tail assets, such as WIF and PEPE, to complement its blue chip asset selection. The protocol also offers a trade-and-earn program, where traders can earn MKL and APT tokens in exchange for volume. MKL is Merkle’s governance token that also shares protocol revenue with MKL stakers. Several features set Merkle Trade above other derivatives platforms, including its implementation of account abstraction and multichain deposits, which creates a frictionless onboarding experience for users who have not used Aptos before. 

Aries Markets and aggregator Panora would not be possible without infrastructure that leverages Aptos’ unique design to provide powerful services to developers. Pyth’s low-latency oracles provide competitive price feeds that brings the Aptos DeFi experience up to speed with pricing that was previously only available on centralized exchanges. For a complete overview of how Pyth makes this happen, be sure to read our report. 

While Pyth price feeds are available on multiple blockchains, Aptos’ secret weapon in DeFi is Econia’s onchain orderbook. Econia’s product differentiates from onchain orderbooks seen on other high performance chains through its utilization of Aptos’ Block-STM execution engine to offer parallel execution, optimistic concurrency, and dynamic memory allocation. This architecture unlocks unmatched capital efficiency and speed, evidenced by $100M all-time volume since its mainnet launch. 

Solana and Sui’s reliance on pessimistic concurrency restricts the design space of orderbooks, where they can either offer atomic settlement or permissionless market making and limit orders, but not both. Econia utilizes Aptos’ dynamic memory allocation to constantly rebalance order depth at high speeds, enabling both atomic settlement and limit orders at the same time. Further, Econia uses an atomic matching engine that can match, execute, and settle complex order flow in a single transaction. Econia is still a very young product, but early results and design choices show potential for its orderbook to scale toward the processing of hundreds of billions of onchain capital with unmatched speed and capital efficiency. Econia is currently positioned as the endgame for DeFi to compete with centralized trading venues, and the full impact of this primitive on total crypto orderflow is yet to be seen. 

A DeFi ecosystem cannot be considered complete without stablecoins, which is an area that still has some hurdles to overcome on Aptos. Currently, Aptos does not have native USDC that is minted directly from Circle, and all USDC on the network is bridged and wrapped through Layer Zero. A full integration with Circle would likely bring a new wave of capital into the ecosystem. Despite this friction, Aptos still has a considerably healthy suite of stablecoins, particularly through Thala Labs’ overcollateralized stablecoin MOD and Ondo Finance’s recent partnership with the Aptos Foundation to bring USDY to the network, the first of many RWA initiatives to come. USDY is backed by short-term US Treasury Bills and enables worldwide access to traditional financial instruments without barriers. You can learn more about how Ondo is bringing RWA tokenization to the crypto industry at scale from our flashnote. 

Thala Labs has retained its position as the dApp with the highest TVL on the network since its launch. Thala offers a liquid staking product, a DEX, a launchpad, and a decentralized stablecoin, MOD. MOD functions in a similar fashion to MakerDAO’s DAI, where users can collateralize yield-bearing assets, such as thAPT or USDY, to mint MOD. Thala’s governance token, THL, utilizes a vote escrow mechanism, to grant users rewards through protocol fees, THL emissions, and voting power over various aspects of the product. With a robust liquid staking product and stablecoin, Thala has cemented itself as the liquidity hub of Aptos, and it is likely that onchain value will accrue to THL overtime as the ecosystem continues to grow. While the THL token is already live, veTHL holders have the potential to earn airdrops of protocols that choose to use Thala’s launchpad. 

Final Thoughts

A fragmented liquidity landscape across L2s has led to newfound appreciation for predominantly monolithic L1 architectures over the past year, especially when considering qualifying capabilities like high throughput and low latency. Despite Aptos being a relatively young blockchain when compared to other L1s, a combination of design choices, network adoption, partnerships, and dApp development proves that the network is primed for breakout momentum over the coming years. When considering the TAM of blockchains, many competitors design strategies tailored to “become the next Ethereum'' or “flip the most successful L2,” but Aptos’ vision expands far beyond this: The team designed a platform to host the new Internet. Aptos intends to capture the TAM of traditional financial institutions, consumer applications, and cloud services onchain.

While other high performance blockchains have recently hit their limits, resulting in degraded developer and user experiences, the Aptos ecosystem has been gearing towards escape velocity, thanks to infrastructure providers such as Econia and LayerZero, as well as an unrelenting commitment to upgradability and security. On the tokenization front, Aptos Ascend will likely bring a new wave of financial institutions onchain over the coming months, while partnerships forged with Microsoft and IO Net have positioned the network to become the host of a new wave of services at the intersection of AI and crypto. 

Users can look forward to an eventual integration with stablecoin providers, as well as a fresh injection of capital through airdrops to fuel another leg of Aptos DeFi. Beyond DeFi, Aptos has another layer of gaming and consumer applications in the pipeline that warrant a report of their own. Further, the inception of a new cohort of Move-based blockchains, such as Movement Labs and Initia Foundation, cements Aptos as a first mover in a new realm of smart contract platforms. With sub-second finality, unparalleled throughput, and a smooth developer and user experience, Aptos is currently positioned as a serious contender in the L1 race, where crypto adoption will move from a small stage of early users to an arena capturing the global economy. 

 

This research report has been funded by the Aptos Foundation. By providing this disclosure, we aim to ensure that the research reported in this document is conducted with objectivity and transparency. Blockworks Research makes the following disclosures: 1) Research Funding: The research reported in this document has been funded by the Aptos Foundation. The sponsor may have input on the content of the report, but Blockworks Research maintains editorial control over the final report to retain data accuracy and objectivity. All published reports by Blockworks Research are reviewed by internal independent parties to prevent bias. 2) Researchers submit financial conflict of interest (FCOI) disclosures on a monthly basis that are reviewed by appropriate internal parties. Readers are advised to conduct their own independent research and seek the advice of a qualified financial advisor before making any investment decisions.