Bixin Ventures 2023.10.25

On October 18, 2022, Aptos Mainnet was launched, marking the emergence of another important blockchain in Web3. Today, Aptos Mainnet has been running for one year. Aptos is a continuously iterative and growing blockchain, and engineers will continue to optimize performance, reduce costs, and enhance decentralization and security. We believe that Aptos is the best choice for the DeFi project.In 2022, Bixin Ventures invested in Aptos, and its achievements so far give us. sufficient reason to believe that Aptos is one of the best choices for the DeFi project.

TL;DR

1. 1. DeFi demonstrates a more open and efficient model and is the future of finance

DeFi will have immense opportunities in future development by improving the operational efficiency of finance and democratizing assets to impact and replace traditional finance

2. 2. Aptos uses the Move language, with a roadmap to 160,000 TPS, finality below 1 second, and low-cost gas fees, suitable for DeFi deployment

Using the developer friendly Move language, roadmap to 160,000 TPS and finality below 1 second, Aptos is one of the most advanced networks through innovations such as parallel execution and Diem-BFT consensus. With costs less than $0.01 / transaction, Aptos is the lowest latency and highest throughput blockchain on the market today (from Messari).

3. 3. 850,000 Followers, 200+ projects built on Aptos, and DeFi is powered by a robust infrastructure

Aptos has a community of 850,000 followers, and infras such as wallets, browsers, security auditors, bridges, and domain names, making it easier for developers to develop and deploy DeFi applications.

4. 4. Multiple high-value grants programs to support DeFi and other types of projects

The Foundation Grant Program along with their recently launched Registry Program provide many opportunities for builders on Aptos. Meanwhile, there are more DeFi reward programs, including Aptos and Google Cloud initiated acceleration programs, as well as Aptos and Thala initiated Thala Foundry.

5. 5. There have been a large number of well-known DeFi deployments in 2023

For users, there have been a large number of project deployments, such as Pancake, Thala, Amnis Finance, Merkle Trade, Sushi, Econia and others to be launched in Q4.

1. DeFi with unlimited potential

We all know that Web3 will change the way the world uses the Internet. However, in this field, decentralized finance is particularly revolutionary and is expected to overturn the opaque and centralized traditional financial system established for decades.

1.1 Centralized exchange incidents makes people turn to DeFi

Centralized trading platforms, where users need to trust their funds within the platform and transfer ownership of assets to the platform, have caused a lot of issues to date. From a legal perspective, it is equivalent to lending assets to the custody platform, and users are the creditors of the platform. Due to the centralized operation of incumbent centralized exchanges, people are also aware of the potential risks of these centralized exchanges.

Why do users turn to DeFi? Firstly, it is the security of assets. The emergence of DeFi allows users to control their assets by holding private keys, which means that no one can misappropriate their funds and the security has been greatly improved. Secondly, users can enjoy certain privacy because they do not need to provide personal information and their wallets are separated from their real identities. Thirdly, users can experience and use a variety of DeFi applications on the chain, such as DEX, stablecoins, Perp, Lending, On-chain Payments, Yield Aggregators, Liquidity Staking, etc.

1.2 As of 2021, 23.8% of adults worldwide still do not have a bank account

As of 2021, according to data from the World Bank, only 76.2% of the global population (aged 15+) have bank or mobile accounts, which means that 23.8% of the global population (aged 15+) still cannot access financial services. At the same time, the 2023 World Bank Annual Report pointed out that it is expected that 574 million people will still be in extreme poverty by 2030. Although there are many factors that lead to poverty, the lack of financial services is one of the important reasons.

Global population with a bank account in 2021, source: World Bank Database

Based on the above reasons, we believe that the development of DeFi is not short-term, but will show a long-term positive development trend. In fact, as of October 24, 2023, the 24H trading volume of DEX was $5 billion US dollars. Although it only accounted for 1.7% of the total trading volume, it increased by 42% compared to the daily average of $3.5 billion US dollars in 2022. At the same time, the monthly average trading volume of DEX also exceeded $10 billion US dollars.

DEX Average Monthly Transaction Volume Source: DeFiLlama & A16Z

Stablecoins, as the basic transaction currency of DeFi, has also shown a trend of rapid growth. As of now, the scale of publishing has exceeded $120 billion US dollars. This also proves that people need a decentralized and stable value US Dollar asset.

Scale of stablecoin issuance on the chain, source: The Block, Coin Metrics, DeFillama

The development of DeFi, which carries such potential, will inevitably require a secure, high-performance, and low-cost blockchain. Innovative decentralized financial applications will be cultivated on blockchains that are on the frontier of innovation. We believe that Aptos is the blockchain that has the best opportunity for the next wave of innovative DeFi applications.

6. 2. Aptos is prepared for the next wave of DeFi growth, and the upgradable nature of their blockchain ensures that Aptos continues to iterate

In the early stages, the Aptos technology stack was designed by 30 of the best blockchain engineers out of Meta. In the following 3 years, a total of 292 developers and dozens of communities participated in the development of the protocol and proposed improvements. Compared with other blockchains, Aptos has greater advantages in security, scalability, cost, decentralization, and infrastructure, especially suitable for DeFi applications with a large number of customer engagement and high value content.

It should be pointed out that upgrades to Aptos’ smart contracts have been implemented on a monthly basis since their mainnet launch. The Aptos team works with developers, listens to their needs, and proactively solves them through assistance. Therefore, it will be a continuous improvement iteration process in terms of performance, cost, decentralization, ecology, etc. It can be expected that there will be continuous positive changes in Aptos in the coming months and years. In the Aptos Improvement Proposal (AIP), you can see the large number of updates that have been made to date.

2.1 Move language & Diem-BFT consensus can ensure that DeFi is secure

Aptos is different from other blockchains by adopting the Move language to ensure blockchain security. The Move language is specifically designed for digital assets, defined by Resource. At the same time, it abstracts the four properties of resources: replicability, indexability, discardability, and storability. Through different combinations of these four properties, users can easily define any type of resource. In addition, the Move language also has verifiability, flexibility, and contract composability baked in.

The security of the Move language is reflected in the fact that it provides code validators and VM-level protection to avoid modifications and attacks by other programmers. This is because no blockchain-specific content was added to the core language during design. In addition, the Move Prover is used to prevent errors during the process of writing smart contracts. In short, the Move language is designed specifically for smart contract development. The Move language combines simplicity and security, changing the construction rules of Dapps.

In addition, the team also designed a high-performance, low-latency BFT Engine, which is currently on its fourth iteration.As long as the BFT verification node ensures honesty, whether the network is inaccessible or non-secure core components are compromised in some way, the Aptos chain will not be forked. The security of the consensus protocol is also audited and verified.

Since its launch, the Aptos mainnet has produced more than 100 million blocks. In addition, in July of this year, the weekly user transaction volume on Aptos also reached 4.9M and continues to rise.

Aptos has produced over 100 million blocks Source: Aptos Explorer

We believe that as the cornerstone of the value of the Web3 world, DeFi must rely on a sufficiently secure underlying public chain, and Aptos is one of the most correct choices for the DeFi development team.

2.2 160,000 TPS, final blocks of less than 1 second, transaction fees of less than $0.01/transaction, supporting a large number of DeFi users

Currently, the actual TPS of the vast majority of blockchains is single to low double digits. However, in order for DeFi applications to achieve the adoption of millions or tens of millions of users and the daily volume of billions or hundreds of billions of transactions, the underlying blockchain must have extremely high throughput and low latency. If the throughput of the blockchain itself is not enough, it will greatly limit the development of DeFi.

Aptos achieved a high throughput of 160,000 TPS through innovations such as decoupling consensus and execution, parallel execution, Diem-BFT consensus, and more. This performance ranks first among mainstream public chains and is significantly higher than the performance of Ethereum L2. 160,000 TPS also gives DeFi applications broader development space.

Aptos has extremely high throughput compared to other L1/L2 sources: Website or Explorer

Block time is also one of the main factors for DeFi developers to choose which blockchain to deploy. Aptos can currently achieve a block time of less than 1 second and will continue to improve. According to Messari, Aptos is a blockchain with the lowest latency and highest throughput on the market today.

Actual block time under 1 second in Aptos, source: Aptos Explorer

Mainstream L1/L2 final block time, source: Explorer of each blockchain

Compared to Centralized Finance, expensive transaction fees often hinder the adoption of DeFi users. Through the continuous efforts of the Aptos team, such as separating execution fees and storage fees, and supporting storage fee refunds,they have now achieved transaction fees of less than $0.01 per transaction, significantly reducing the transaction fees of DeFi users.

Less than $0.01 per transaction of transaction fees, Source: Aptos Explorer

2.3 113 validators in 25 countries and 50 cities around the world, allowing DeFi to achieve sufficient decentralization

One of the core narratives of Web3 is decentralization, and Aptos has done a lot of work in this regard to attract more validators to join the Aptos ecosystem. Fortunately, as of October 25, 2023, Aptos has achieved 113 validators in 50 cities in 25 countries around the world, with a total value of over $5 billion US dollars, and a total of 886,683,319 APT staked in the network. The number and geographical distribution of validator nodes ensure the decentralization and security of the network.

In future development, Aptos will also attract more nodes to join, making the Aptos network more decentralized and secure.

Validators around the world Source: Aptos Explorer

2.4. 850,000 Followers, 200 + projects developing on Aptos, and strong infrastructure helps DeFi grow on Aptos

The development of DeFi applications cannot be separated from the ecosystem of blockchains, and Aptos has a huge scale in both user and developer communities. At present, the total number of followers of media such as Twitter, Discord, Medium, Telegram, and others is as high as 850,000 and continues to grow. There are over 200+ monthly active developers in the ecosystem, and great companies such as Microsoft, Google, Mastercard and Franklin Templeton have also partnered with the Aptos blockchain.

Although there has been a decrease in sentiment since the beginning of this year, there has been a significant increase in Aptos developers compared to the beginning of 2022. We believe that as Aptos continues to upgrade and optimize the public chain on a monthly basis, more and more developers will join.

Aptos Active Developer of the Month, Source: Developerreport

In terms of infrastructure, Aptos already has different types of projects live such as wallets, browsers, developer tools, security auditors, bridges, domain names and more. DeFi developers can collaborate directly with other projects in the community, greatly reducing the acquisition cost of partners.

During Token20249 in 2022, Aptos announced its collaboration with Google Cloud, including running validators on Google Cloud, co-hosting accelerators and hackathons, focused on the support of the developer ecosystem on Aptos

Meanwhile, Aptos collaborates with Microsoft to explore digital payments and asset tokenization. In addition, Aptos will also utilize Microsoft’s Azure OpenAI service. After using Azure OpenAI, Aptos will launch Aptos Assistant, a secure and user-friendly digital assistant that can answer Aptos-related questions.

7. 3. Multiple high-value grants programs to support DeFi and other types of projects

In order to encourage more projects to join the Aptos ecosystem, the Aptos Foundation has launched Grants for infrastructure and applications to motivate applications such as Developer Toolings, SDKs, Libraries, Documentation, Guides, DeFi, NFT, Gaming, etc. You can submit your application through their application link. The amount of grants is between $5,000 and $50,000. The Registry has also listed 7 projects that are looking to be built on the Aptos ecosystem.

For the artist community, Aptos launched the Artist Grant Program, which has the aim of supporting the next generation of artists on web3.

In addition, Aptos has established an accelerator program with Google Cloud, which aims to support web3 entrepreneurs and developers. Excellent projects will receive APT token rewards and Google credits.

Most recently, Aptos and Thala announced the launch of a $1 million DeFi fund in September this year to incentivize the development of native DeFi applications on Aptos. With the launch and growth of supported native DeFi projects, the fund size will expand to $5 million. Each project can receive up to $250,000 in rewards. In addition to receiving funds, 5 outstanding projects will also receive GTM guidance, development assistance, investor referrals, and more. You can apply now.

8. 4. There have been a large number of well-known DeFi deployments on Aptos

Currently, Aptos has 23 DeFi applications on their official website, including Pancake, Thala, Merkle Trade, Amnis Finance, Sushi, Econia and more. Below are some additional projects.

DeFi projects on Aptos, Source: Aptos ecosystem

Sushi

Sushi is a well-known DeFi project, and its first Non-EVM version of Sushi V2 will be deployed on Aptos in the coming weeks. Before working with Aptos, Sushi was deployed on EVM chains such as Ethereum, Polygon, Arbitrum, and BNB Chain. This cooperation also represents the cooperation between DeFi applications in the EVM system and Move blockchains, which is crucial for promoting Sushi’s cross-chain and multi-chain goals and has milestone significance.

Econia

Econia has implemented an atomic matching engine that takes advantage of the sub-second finality of Aptos to clear transactions the moment they enter. From spot trading to leveraged perpetual futures, Econia aggregates liquidity for maximum capital efficiency. Secure, decentralized, permissionless, fully on-chain and always open source, Econia is the foundational layer of next-generation DeFi and the ideal settlement engine for any digital asset.

Aptos Labs also participated in the financing of its seed round ($6.5 million) as a backer to support the development of the DeFi project. Econia will launch in November with 4 different frontends (Kana, Pontem, Aries, SwapGPT).

Merkle Trade

Merkle Trade is a decentralized trading platform for cryptoassets, forex, and commodities using a fund pool model, with leverage up to 1000x. Its goal is to become the largest decentralized leverage trading platform and provide a pleasant trading experience for every user.

Compared to other AMMs, the first feature of Merkle Trade is the gamification experience, where users can accumulate experience points in trading, improve their ranking on the leaderboard, and unlock loot. Another feature is the provision of forex and commodity trading pairs, and the fees for forex trading pairs are as low as 0.0075%, allowing users to trade 3 assets on one platform.

Currently, the main network of Merkle Trade has been launched, welcoming everyone to experience, and more rewards are waiting for everyone.

Merkle Trade’s trading interface, source: Merkle Trade official website

Thala

Thala is the native DeFi protocol on Aptos, which has been launched on the mainnet. Thala has two products: Move Dollar and AMM (Thala Swap). Move Dollar (MOD) is a stablecoin generated by over-collateralization of a basket of on-chain assets, supporting assets including LSD derivatives, LP Tokens, Deposit Receipt Tokens, and RWAs.

Thala Swap is an AMM that can dynamically adjust LPs and supports Weighted Pools, stablecoin pools, LP bootstrap pools, etc. Thala Swap can expand the usage scenarios of MOD stablecoins. In addition, LaunchPad built on top of Thala Swap can provide individual users with an early way to participate in projects.

In October last year, Thala announced the completion of $6 million financing. In September this year, Thala and Aptos jointly launched the $1 million DeFi incubation program and welcomed DeFi teams to apply .

Amnis Finance

Amnis Finance is a Liquid Staking project similar to FRAX, providing a staked yield of up to 7%. The model of Amnis Finance is similar to Pendle, packaging the yield assets (stAPT) into SY (standardized yield token), and then splitting the SY token into principal and yield parts. In this process, the yield is tokenized into a separate token. The main network of Amnis Finance is now online.

Amnis Finance staked page, source: Amnis Finance official website

Join the Aptos ecosystem and build great Web3 applications! Follow Aptos on Twitter, Medium, and view their job postings to apply for open positions.Bixin Ventures will also continue to support the development of Aptos’ ecosystem in the Asia Pacific region.