Aptos Staking Rewards Cut by 46% Sparks Decentralization Debate

Key Points

• Aptos Staking Rewards Cut by 46% Sparks Decentralization Debate
• Aptos proposal AIP-119 aims to reduce staking rewards from 7% to 3.79%.
• Proposal intends to curb inflation and boost productive capital use.
• A validator delegation program will support smaller operators.
• Community response is mixed, balancing innovation vs. decentralization.

A new governance proposal, AIP-119, is under community review — and it’s making waves. The plan? Slash staking rewards from 7% to just 3.79% annually over the next three months.

Introduced by Aptos Labs engineer Sherry Xiao and core developer Moon Shiesty, the proposal aims to tackle rising inflation on the Aptos network. It draws parallels to traditional finance, comparing staking returns to “risk-free” benchmark rates like interest yields.

however, staking rewards also serve as an incentive for long-term holding of APT; all things equal, less ecosystem rewards means less incentive to hold APT

i expect any lowered staking demand will be offset by (1) the reduction in inflation from this AIP and (2) new reward… pic.twitter.com/B6dkRjAqdG

— moon shiesty (@moon_shiesty) April 18, 2025

But why reduce rewards in the first place?

The current 7% return on staking is seen by the developers as too generous. It encourages passive participation rather than fueling real growth and innovation in the Aptos ecosystem. By reducing this rate, the team hopes users will start seeking out active earning strategies — like restaking, MEV extraction, and DeFi involvement.

Moon Shiesty explained on X that reduced staking demand could be offset by new opportunities launching soon. These include DeFi rewards, stablecoin incentives, and more dynamic network activities expected within six months.

Aptos Total Circulating Supply. Source: X/Shiesty – Techtoken

There’s also a plan to redirect saved emissions (from the cut in staking rewards) to support liquidity, gas fee subsidies, and stablecoin initiatives — especially for early-stage Layer 1 projects.

A similar focus on optimizing network economics can be seen in other ecosystems, such as Pi Network’s controversial three-phase migration, where users have also raised concerns about long-term usability and engagement incentives.

Smaller validators raise concerns, delegation program proposed

With lower staking rewards, validator sustainability becomes a hot topic — especially for smaller operators.

Running a validator node in the cloud can cost between $15,000 to $35,000 annually. That’s a serious expense, and for validators managing under 3 million APT (roughly 50 of them), it could become unsustainable under the new plan.

To counter this, AIP-119 includes a delegation program. This initiative aims to support smaller validators by allocating funds and token delegations, ensuring they remain part of the network. It’s all about maintaining decentralization, regional diversity, and community engagement.

But opinions remain split.

Yui, COO of Aptos-based game Slime Revolution, voiced concerns that this change could force out smaller validators and tilt control toward larger players. On X, she emphasized the need to balance innovation with decentralization.

While it could drive innovation, I’m concerned about the potential impact on smaller validators and decentralization. 🧐

We need to make sure the move doesn’t push out smaller participants! @Aptos should focus on balance and long-term resilience. https://t.co/Mm1SrZNivd

— Yui | Slime Revolution (@Yui_0x12) April 19, 2025

On the flip side, Kevin, a researcher at BlockBooster, thinks the change is necessary.

He argues that lower inflation leads to stronger product-market fit. Developers must build real utility instead of relying on token emissions. He also believes that APT’s price might rise as a result of this proposal — which could help balance out the lower APY.

如果AIP-119提案通过的话，Aptos的质押奖励率将会在3个月内从7%降至3.79%。

通胀率的降低能给Aptos带来哪些利好？

-从叙事层面来说，通胀率下调直接降低APT的年供应增速，可能是Aptos积极向比特币靠拢的关键提案，APT的通胀率锐减可以使其立足“稀缺性溢价”，与主要竞争对手相比有更强的配置价值。… https://t.co/SwbUKBqM8v

— Kevin (@BlazingKevin_) April 18, 2025

The idea of rewarding real activity over passive holding mirrors recent trends across the Web3 space — from Ripple securing FINRA approval to build trust with regulators, to Coinbase’s legal entanglements in Oregon that highlight the importance of long-term sustainability in crypto projects.

Community division shows deeper network identity crisis

The Aptos community’s mixed reaction to AIP-119 reflects a deeper debate — what kind of network Aptos wants to be.

On one hand, innovation and real use cases are the way forward. That means moving away from passive token holding and encouraging developers and users to build value. Lower staking rewards could nudge the ecosystem in that direction.

On the other hand, decentralization remains a core blockchain value. Reducing validator income — especially without a strong and fair support system — risks centralizing control among those with more capital or infrastructure.

This kind of tension isn’t unique to Aptos. We’ve seen similar debates elsewhere in the crypto space. Base Creator Jesse Pollak recently faced backlash for promoting projects that some say clash with decentralization ideals. And in the token economy space, projects like RFC are navigating high volatility, yet claiming that long-term cycles will restore value.

For Aptos, the success of AIP-119 — if passed — will depend not only on tokenomics, but also on how the community supports small validators and balances economic incentives with decentralization.