Aptos Proposes 45% Cut in Staking Rewards to Boost Ecosystem Engagement

Aptos, a Layer 1 blockchain recognized for its speed and Move-based development ecosystem, has introduced a significant proposal that could transform the network's passive income landscape. Aptos Improvement Proposal 119 (AIP-119) suggests a substantial reduction in staking rewards, aiming to decrease yields from 7% to 3.79% over a three-month period. This proposal has sparked debate about whether it promotes sustainable network development or poses risks to validator decentralization and long-term ecosystem health.

The proposal, co-authored by Aptos Labs' Head of Production Engineering, Sherry Xiao, and Mirage developer Moon Shiesty, aims to discourage passive income and low-effort participation. By reducing staking rewards, the proposal seeks to encourage participants to engage in more productive activities such as restaking, contributing to decentralized physical infrastructure networks (DePIN), or engaging in MEV (Miner Extractable Value) strategies. These activities, while riskier, offer higher and more sustainable returns, potentially enhancing the Aptos ecosystem's utility and development.

However, the proposed reward reduction has raised concerns among validators and node operators, particularly regarding profitability for smaller operators. Running a node on Aptos, similar to Solana, requires significant technical resources and financial commitment. Without complementary systems like a robust delegation program, lower yields could push smaller validators out, undermining the network's decentralization and resilience.

Moon Shiesty acknowledged this risk and suggested implementing a stake-matching model, similar to Solana’s delegation program, to mitigate the impact on small validators. This model would rebalance stake toward more active and engaged network participants while maintaining an inclusive validator set. Xiao further supported this direction, proposing a review of current delegations and potentially removing validators who aren't actively contributing to network health. This move would align incentives with Aptos' long-term vision of a high-performance and developer-first chain.

Currently, Aptos’ staking yield is around 7%, placing it above Ethereum’s average of 3.1%, but slightly below Avalanche’s 7.6% and significantly under Cosmos’ 15%. Cutting rewards could make Aptos less attractive to risk-averse stakers, especially if other chains maintain higher base yields. However, proponents argue that real, utility-based yield, rather than inflation-driven staking rewards, should be the ultimate goal. The Aptos team is betting that the community will embrace this vision, pushing toward an ecosystem driven by real value creation rather than passive emissions. If successful, this model could differentiate Aptos from other networks and establish it as a leader in efficient capital use and network engagement.

The authors of AIP-119 are gathering community feedback for four weeks before taking the proposal to mainnet governance. Early signals suggest strong community support, although concerns around validator health remain valid and unresolved. If approved, the reduction in rewards will likely take effect over a three-month tapering period, giving validators time to adapt or explore alternative revenue models. If Aptos can introduce a delegation or incentive-matching program in parallel, the risk to decentralization could be mitigated. On the flip side, failure to implement protective mechanisms might lead to a centralization of stake among well-funded validators and institutions, a situation that has historically triggered long-term instability in other ecosystems.

The likely outcome is that if community support remains strong and the Aptos Foundation acts swiftly with supportive measures, AIP-119 could pass with minimal friction and signal a mature, forward-thinking shift in token economics. Expect increased activity in restaking protocols, DePIN infrastructure projects, and yield-generation tooling around the Aptos ecosystem in Q2 and Q3 2025.