What is the AIP-199 governance proposal? Can Aptos regain the glory of MOVE public chain Gemini through the redistribution of staking interests?

As the world gradually forgets that Aptos was once a twin blockchain of the MOVE language alongside Sui, remembering only BLACKPINK ROSE's viral hit APT., the Aptos governance forum has proposed AIP-119. In short, the proposal aims to reduce staking rewards for Aptos as a PoS blockchain, attempting to lower token inflation and staking rate, and further release capital efficiency.

(BLACKPINK ROSÉ and Bruno Mars collaboration single APT., APTOS simultaneously surges 40%)

AIP-199 Target to Reduce Staking Rewards to 3.79%

Specifically, AIP-199 plans to reduce staking rewards by 1% monthly over the next 3 months. It is expected to lower the staking rewards rate to approximately 3.79%. This will be implemented in stages over 6 months to observe and adjust impacts. Additionally, the proposal explores the possibility of reward reallocation, such as redirecting some rewards towards improving liquidity, infrastructure development, and developer grants.

This proposal has also raised concerns about the survival pressure on small validators. According to statistics, 53 validators currently have staking amounts below 3 million $APT and may be most affected by the adjustment. Therefore, the proposal also considers providing a "Community Validator Assistance Program" to support small validators (staking less than 3 million $APT).

Target to Align Token Inflation Rate with Other L1

The proposal primarily aims to address the initial high-inflation token issuance design, which was mainly used to incentivize validators and infrastructure. However, when staking returns (nearly risk-free) exceed DeFi rewards, it leads to an overly high token staking rate, squeezing DeFi development. Meanwhile, most newly minted $APT currently flows to the Aptos Foundation (holding over 90% of staking).

Many validators rely on costless staked tokens granted by the foundation for profit. Simply calculating, assuming the current inflation rate is 7%, staking around 10 million APT (at least 30 validators own over 10 million $APT), validators can earn approximately 49,000 $APT annually. Considering the annual cost for such validators is around $30,000, this provides them with substantial risk-free profits. If the proposal passes, it is expected to make $APT staking rewards more aligned with risk-free returns of other L1 chains.