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

Aptos price has risen for six straight days as Bitcoin and most altcoins have continued making a comeback.

Encouraging user metrics

Aptos (APT), a relatively new layer-1 blockchain, has shown strong user metrics as interest in its network has increased. Data shows that the number of addresses has risen from 74,000 in January to over 186,000.

These users have significantly boosted their transactions within the network. One of its biggest accomplishments occurred in May when the number of transactions jumped to over 117 million in a single day.

Meanwhile, its Decentralized Finance (DeFi) ecosystem is performing better than that of Cardano, one of the biggest cryptocurrencies. Aptos’s total value locked (TVL) has surged to a record high of 53.4 million APT, up from the year-to-date low of 11.5 million APT.

The volume of stablecoins in the ecosystem rose to over $120 million, higher than the YTD low of $49 million. Stablecoins are an essential part of any blockchain since they indicate more liquidity and act as a proxy for economic activity.

High staking yield but dilution is a risk

Aptos has attracted investors due to its higher staking yield compared to most cryptocurrencies. It has a staking yield of 7%, compared to Ether’s 3.4%, Solana’s 6.5%, and Cardano’s 2.87%.

Most of the Aptos in circulation—about 79%—have been staked, which is a positive catalyst. However, the risk, which likely explains why the APT price has dropped by 63% from the YTD high, is dilution.

A look at Aptos tokenomics shows that it has 367 million unlocked tokens and 632.50 million locked. Millions of tokens are unlocked each 17th of the month, a process that will continue until February 2029, according to TokenUnlocks.

These token unlocks are usually bearish for a cryptocurrency because of their dilution effect. For example, some of these tokens will go towards staking pools and dilute existing holders.

In contrast, a cryptocurrency like Mantra (OM) yields 21% and has all tokens in circulation. Similarly, most of Avalanche’s tokens have been unlocked, making its 8% yield safer. 

Aptos token’s volume has been in a downward trend after peaking in March. Its price remains below the support at $7.70 (the lowest point in May) and the 100-day moving average. This could indicate that the current recovery is part of a dead cat bounce.