*Note: a SWOT analysis is an evaluation of the fundamental, operational, technical, social, economic, and even to some degree administrative elements of a project. This is not a model to be used for trading purposes. (NFA, DYOR)
Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for establishing a high-level understanding of the state of a project’s well-being through the lens of a birds-eye view.
It can help formulate decisions around which areas require more attention, set performance goals, and organize a foundational understanding of where a project is headed.
Rarely (if ever) used in crypto, it is time to apply this timeless method of evaluation to the digital asset space.
💪 Strengths (Internal) (Helpful)
1. Flywheel of Innovation
Aptos is consolidating the best of all worlds by applying some of the most cutting-edge designs across every element of the project. From governance optimizations that allow delegating actors the right to post independent votes, transactional optimizations separating gas payers and transaction senders, allowing sponsored/subsidized activity, functional optimizations splitting consensus away from data dissemination, improving efficiency, alongside the MOVE language, MOVEVM, AptosBFTv4, Block STM, and an ever-expanding set of AIP (Aptos Improvement Proposals), the project is in a neverending cycle of self-improvement. Obviously, many projects can lay claim to their innovations, but the reasoning behind why this is highlighted for Aptos specifically has to do with how openly available all of the information is and how relatively easily it can be accessed.
2. Derived from Meta
Aptos is the result of the research and development conducted by Meta (formerly Facebook) during their attempt to launch the cryptocurrency projects Diem and Novi. After the regulatory heat against Meta became too difficult to deal with, the infrastructure was spun off into Aptos. Inheriting all of the knowledge, corporate support, and intellectual capital, Aptos was able to raise a cool $400 million USD in 2022 on the back of its reputation/merits. Having the notoriety and prestige of association with Meta gives Aptos potentially unlimited capacity for fundraising and networking. Moreover, given the extent of private deals that take place in crypto land, it is not impossible to rule out some kind of shadowy/indirect affiliation between Meta and Aptos.
3. MOVE Programming Language
Originally developed by Meta for its Diem crypto project, MOVE is a functional language based on RUST, which has become one of the most promising up-and-coming languages in the Web3 space. Avidly explored by new-generation teams today, including SUI, there is an entire ecosystem of projects now contributing to the progression and growth of MOVE. By leveraging MOVE for its architecture Aptos is building an army of powerful, specialty engineers and distinguishing itself from nearly every other project. Moreover, if the primitives that MOVE provides truly result in a user/developer experience that penetrates the mass markets, Aptos would be the thought leader in the space whom everybody else would refer to.
4. Intuitive Learning Modules
Developer onboarding has by far been the most critical bottleneck facing Web3 as a whole. New virtual machines, data structure, and logic already present an intellectual hurdle for devs to conquer; the onslaught of new languages has only further muddied the waters and made it that much less appealing for new programmers. Perhaps due to their experience and understanding of the Web2 world, Aptos has provided not just excellent documentation of its information but has gone beyond with tutorials in a highly comprehensive, inviting format. By reducing the friction associated with the Web3 learning curve, Aptos becomes a desirable place for new Developers to arrive.
5. Decent Decentralization
With over 125 validators currently active and a Nakamoto coefficient ranging from 15–17, Aptos deserves credit for achieving a notable level of decentralization, given how still young the project is. The decentralization is achieved through coordinated efforts between early-stage participants with locked tokens and a lot of delegating power and the Aptos foundation itself, diligently spreading their votes to maximally optimize for a more even distribution. This movement (no pun intended) is counterintuitive to the centralized-overlord image many degens paint about Aptos; even if the current levels of decentralization stay steady, Aptos would be more decentralized (at the validator level) than the vast majority of the projects on the first 10 pages of CoinMarketCap.
6. Staking Ratio Over >83%
Of the roughly 1,070,000,000 APT tokens in existence, there are 892,118,332 APT tokens, or just over ~83.37%, currently staked. While the caveat here being that the locked tokens belonging to early-stage investors are also staked, that remains among the highest of any tier-one staking crypto project. At this level, the staking ratio becomes a leading correlational (delayed) indicator that can be used to gauge the macro state of the network at a given moment. Based on how this metric fluctuates over time, it becomes possible to evaluate the level of conviction of the current stakeholder set and even model how the supply will flow. The most exciting change to observe will be how the unlocks impact it.
😞 Weaknesses (Internal) (Harmful)
1. Vicious APT Unlocks Upcoming
Starting in December of 2023, the rate of “genesis” tokens (those allocated to early participants) coming into circulating supply will increase, set to double the total supply in 2024 alone. With roughly 300 million tokens (~30%) already in circulation, the relative amount of new tokens making their way into the marketplace will potentially result in suppressed prices during upcoming rallies as earlier investors look to offload their positions.
2. Locked Supply Staking
Aptos allows for the tokens that are locked away to be staked. The tokens earned are immediately liquid, creating a conflicting set of interests between user groups. The motivation behind such a decision is understandable: to entice early-stage participants with all the more economic incentives; however, allowing for this to take place creates a closed environment where only deep-pocketed, resourceful participants amplify their control over the network. Given how disproportionately large the amount of locked tokens being staked versus free-floating tokens is, the locked staking supply makes Aptos a “Rich get Richer System.”
3. Low Stablecoin Interest
Stablecoins are a direct expression of a network’s retail/commercial adoption. Coming in sub $50 million (USDC dominating >75% of the stable supply) and the presence of just a single project currently working within the Stablecoin segment, that is Thala with the MOD (Move Dollar), Aptos is very behind on this front.
🧐 Opportunities (External) (Helpful)
1. Pipeline of Megalodon Partners
Already locked in a deal with Microsoft that brings Aptos Move to the GitHub Co-Pilot and the Microsoft AI to the Aptos community. With its strong emphasis on gaming and NFTs, Aptos has been able to secure a multitude of partnerships with prominent organizations around the world, including NeoWiz, Marblex, Lotte Group, and others. Outside of gaming, areas such as ticketing with KYD Labs and collectible community Art with NBCUniversal have also caught some recognition. Moving forward, it seems that the pace of new partnerships and their significance will only continue to increase.
2. Chingari Application Integration
Ranked third by gross income and boasting over 100 million downloads from the Google app store, Chingari is considered to be one of the underdogs on the Web2 social media scene. Integrating Aptos sometime in the second half of 2023, Chingari empowered users with the ability to mint and transact in Aptos native digital assets. This single application, with its limited utilities and limited audience awareness resulted in a quadrupling of on-chain activity.
3. Synergies with Eastern APAC Region
The eastern APAC (Asia Pacific) region is an absolutely massive, developing market that has just begun to enter the crypto economy. Countries such as China, Japan, Singapore, Indonesia, Vietnam, etc., are home to highly digitized societies with a historical inclination towards gambling as a vehicle to escape their economic circumstances. Aptos has been putting forth much more effort to win the hearts of the APAC communities while the US has been stuck in regulatory limbo. In the event that the next crypto cycle is led by non-US countries, Aptos is positioned well to capture that influx.
4. DEFI Growth
Sitting at around ~80 million USD in TVL across its DEFI platforms, Aptos has a tremendous runway for new capital. Both legacy DEFI projects as well as newly built ones, stand to benefit from extending services to the Aptos Network. The lower the starting point, the greater the impact of inflows; moving TVL from ~80m to ~380m is a 375% increase, and moving it from ~380m to ~680m is 79%.
5. Integrations with External OG Protocols
Alternative networks (including Ethereum, Solana, Binance, and others) have already established superiority in the degree of applications built on them. Meanwhile, Aptos is still severely behind in terms of the number of protocols in its ecosystem; there are still no EVM projects on Aptos, but SushiSwap has already announced its intentions to become the first one.
😳 Threats (External) (Harmful)
1. Layer 1 Competition
Layer 1’s are easily the most contended sectors of the crypto economy. Their foundational nature to the establishment of a digital financial system has attracted competition from the world’s brightest and best-funded teams around the world. Putting Ethereum aside, there has been an onslaught of new generation Layer 1’s, from Solana to Near to SEI, SUI, and beyond, that provide superior technological capabilities over the preceding generation projects. Moving forward, the competition that Aptos faces will continue to become more sophisticated, forcing the project to stay at the bleeding edge (or become the focal point) in order to remain relevant.
Aptos is a serious force to be reckoned with.
Positioning itself as a very smooth, no-hype, no BS, technologically heavy project, Aptos is building a professional environment catering to a unique culture.
Not wasting its resources trying to battle other communities, Aptos moves forward with big, peaceful, focused strides.
There was a lot not mentioned in this coverage, including the suave, quixotic images and qualities of technical cofounders Mo Shaikh and Avery Ching. The deep ties to Venture Capital. The social strategy.
The Supply policy.
Perpetual Supply inflation is as an element that is economically impossible to ignore, and Aptos has it. Usually, this would be deeply scrutinized; however, at a modest 7% tapering off to 1.5% by 2032 and a minuscule burning mechanism applied to all transaction fees, this seems to be a more balanced long-term approach.
In the middle of experiencing its first full cycle in crypto, The nascency of Aptos holds much promise for future waves of projects that grow the ecosystem with retroactive airdrops, potentially resulting in recursive wealth effects that spill over into the token.
Thank you so much for reading,
I hope this serves you well on your journey.
Live long and prosper 🥂
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