Aptos price is rising, but 7% staking yield comes with a major risk

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As a seasoned crypto investor with several years of experience under my belt, I’ve seen my fair share of market volatility and project growth. The recent surge in Aptos (APT) price, now on its seventh consecutive day of gains, has piqued my interest.

The price of Aptos has increased every day for the past six days, with Bitcoin and most other cryptocurrencies experiencing a resurgence.

Encouraging user metrics

Aptos (APT), a recently emerged layer-1 blockchain, has experienced significant growth in user activity as more people have become interested in its network. The data indicates that the number of unique addresses on the platform has surged from approximately 74,000 at the beginning of January to over 186,000 now.

The number of transactions processed daily through this network has experienced substantial growth, with one remarkable achievement reaching over 117 million transactions on May alone.

Currently, Aptos’ Decentralized Finance (DeFi) system is outperforming that of Cardano, one of the major cryptocurrencies. The total value locked (TVL) in Aptos has reached a new peak of 53.4 million APT, marking a significant increase from its year-to-date minimum of 11.5 million APT.

The amount of stablecoins circulating in the system surpassed $120 million, exceeding the year-to-date minimum of $49 million. Stablecoins play a crucial role in any blockchain setup as they suggest a greater degree of liquidity and serve as a proxy for economic transactions.

High staking yield but dilution is a risk

As a researcher, I’ve noticed that Aptos stands out among cryptocurrencies due to its impressive staking yield. Specifically, it offers a yield of 7% compared to Ether’s yield of 3.4%, Solana’s yield of 6.5%, and Cardano’s yield of 2.87%.

Approximately 79% of the circulating Aptos have been staked, contributing positively. Nevertheless, there’s a significant risk – potentially causing a 63% decrease in APT price from its year-to-date peak – known as dilution.

Based on my extensive experience in the crypto world and having closely followed the developments of various projects, I find Aptos’ tokenomics quite intriguing. From what I gather, there are currently 367 million Aptos tokens in circulation, with another 632.50 million locked up. Now, this is where it gets interesting: every month on the 17th, a significant chunk of these locked tokens becomes unlocked and released into circulation.

Token unlocks often have a bearing that is negative for cryptocurrencies due to the dilutive impact they can have. For instance, certain tokens are set aside for staking pools, which can reduce the value of existing token holdings by increasing the circulating supply.

Instead of Mantra (OM), which offers a return of 21%, and has released all of its tokens into circulation, Avalanche’s yield is 8%, with most of its tokens already in circulation. This means that the potential risks associated with Avalanche’s higher returns are reduced due to the larger supply of tokens.

The trading volume of Aptos token has been decreasing since its peak in March. Currently, its price hovers below the $7.70 support level, which was the minimum in May, as well as beneath the 100-day moving average. This bearish trend might suggest that the recent market recovery is a mere temporary rebound before another potential price drop.

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2024-07-17 16:49