Aptos Powering New DeFi Opportunities

Joule Finance
9 min readMar 29, 2024

Aptos is a high performance blockchain with extremely high TPS (sustained 160k+ transactions per second). Fast finality is extremely difficult to achieve on current Ethereum mainnet or L2s, hence such a significant TPS improvement unlocks a suite of DeFi apps not possible on EVM chains. Being the successor of Diem blockchain developed and funded by Facebook, Aptos uses a new programming language called Move and the Move Virtual Machine (MoveVM).

With advancements in cloud computing and distributed systems, building web2 Internet services that can scale to billions of users has never been easier. Companies like Amazon, Google, and Facebook have demonstrated this at an unprecedented scale. However, Web2 users must explicitly trust centralized entities for using their services; this has become increasingly concerning to the new society which is looking for decentralization and distributed power.

The Web3 version of the internet is solving for such concerns by providing decentralized and immutable bookkeeping techniques that allow users to interact with one another without requiring to trust intermediaries or centralized entities. The Aptos vision is to deliver a smart contract platform as a decentralized infrastructure layer needs to reach billions of users across the world with extremely high throughput, security, low latency, fault tolerance and modular architecture.

Over a decade ago, Satoshi Nakamoto found a solution (a workaround) for the famous technical trilemma of CAP theorem in distributed systems [Consistency ©, Availability (A), Partition tolerance (P)] by introducing the “Proof of Work” for mining the blocks to achieve a common digital consensus, blockchains today are faced by a new age trilemma — scalability, low-cost and decentralization (security). Aptos has found a solution for this trilemma.

Major Innovations powering Aptos :

  1. High Throughput and Low Latency:

By adopting a batched + pipelined + parallelized approach to transaction processing, Aptos achieves extremely high transaction throughput with low latency. Transactions are grouped into batches by each validator during transaction dissemination, and batches are combined into blocks during consensus.

2. Continuous transaction dissemination and stake-weighted Proof-of-Availability:

a) Validators continuously stream batches of transactions to each other, utilizing all available network resources concurrently. Each batch distributed by a validator is persisted, and a signature on the batch digest is sent back to the originating validator. When any 2f + 1 stake-weighted signatures on the batch digest are collected, they form a Proof of Availability

b) By correctly evaluating the mempool, separation of transaction ordering and transaction dissemination enables high-performance BFT consensus within Aptos. Shoal is a framework for enhancing any Narwhal-based consensus protocol (e.g., DAG-Rider, Tusk, Bullshark) with pipelining and leader reputation.

With Shoal, Aptos has improved Bullshark’s latency by 40% in the failure-free case and by 80% in the failure case. (As widely known already, Solana took a bottom-up approach towards achieving high throughput using the Proof-of-History mechanism, which is a special cryptographic hash function that assigns a unique timestamp and a count to each transaction. With this timestamp and the counter, there is no need for transaction messages to be time-stamped again and again throughout the network resulting in higher throughput that saves enormous amounts of bandwidth.)

Similarly, Aptos has taken a bottom-up approach towards achieving the high throughput focusing on batching, pipelining and parallelizing transactions. Validators can continuously stream batches of transactions to one another in parallel greatly reducing the amount of data required to be shared on each block proposal. Aptosv4BFT is claimed to be the fastest, production-ready Byzantine fault-tolerant consensus protocol.

c) Leveraging stake-weighted Proof of Availability (PoAv), Aptos incentivizes both validators and stakers optimally. Similar to Eth-PoS requirement of staking 32 $ETH, in order to become a validator on Aptos, participants must stake a minimum required amount of Aptos tokens. This requirement ensures that validators are available and have a vested interest in the network’s health and security.

d) The “2f + 1” formula is a quorum requirement ensuring that as long as no more than “f” validators are faulty (or malicious), the network can reach consensus. Such a proof guarantees that at least f + 1 stake weighted honest validators have stored the batch, and all honest validators will be able to retrieve it prior to execution. The stake weight affects leader selection ensuring that those with more at stake have a proportional influence on the network.

e) Validators have the autonomy to decide on the distribution of rewards between themselves and their stakers. This arrangement must be clear and agreed upon by both parties beforehand. At the end of every epoch, validators and their stakers receive their rewards through specific on-chain Move modules.

3. Innovative modes of interaction between validators and clients:

Focusing on flexibility and the ability to cater to diverse client needs and preferences. These new modes of interaction offer clients various options like immediate notifications about transaction status to more direct control over transaction execution and state synchronization.

a) Notification of Persisted Transactions: Clients have the option to be notified when specific transactions have been included in a batch of persisted transactions. In this context, a transaction being “persisted” means that it has been recorded on the blockchain but not necessarily committed. This feature is useful for applications that need real-time information about transaction status to promptly react to changes or updates in the blockchain state.

b) Information on Ordered Batches of Transactions: Clients can be informed when a batch of persisted transactions has been ordered. Transaction ordering is a critical step in the consensus process, determining the sequence in which transactions are processed and executed. The ability for clients to know when their transactions are ordered allows them to anticipate the execution results, opening up the possibility for clients to execute transactions locally, reducing latency by not having to wait for remote execution by validators. This is particularly advantageous for applications requiring high throughput or those sensitive to transaction processing delays.

c) Option for Certified Transaction Execution: Clients can choose to wait for the certified execution of transactions by validators. This means clients opt to rely on validators not only for processing transactions but also for the assurance that transactions have been executed correctly and the results are verified and validated by the consensus mechanism. By electing this option, clients can perform state synchronization based on the attested (certified and guaranteed) results. This is crucial for applications where the integrity and trustworthiness of transaction execution are paramount.

4. Parallel Transaction Processing via Block-STM:

Aptos introduced Block-STM, a mechanism for parallel transaction processing that supports atomicity in complex transactions without requiring upfront knowledge of data locations. This innovation allows for more flexible and efficient execution compared to traditional parallel execution engines, which often need to know which data will be read or written in advance.

Even Polygon is parallelizing their transactions using BlockSTM for EVM.
Click here to read the tweet!

5. Horizontal Throughput Scalability and Sharding:

Aptos focuses on horizontal throughput scalability, a method that increases capacity by adding more machines or nodes to the network, rather than relying solely on the power of individual nodes. Sharding, which divides the network’s workload into smaller, manageable pieces, is integrated as a core concept. This ensures that the network can scale efficiently while maintaining a high degree of decentralization. Initially Aptos is planned to have a single ledger state. In the future, users will be allowed to choose suitable sharding schemes and intershard communication may take place via a homogeneous bridge.

6. Fast and Secure Execution with Move: Aptos utilizes a new smart contract programming language called Move, designed to enhance security and efficiency in executing smart contracts. Move allows for precise control over the digital assets it governs, reducing the risk of bugs and vulnerabilities that have plagued other smart contract platforms. Beyond this, the Move Prover, a formal verifier for Move smart contracts, provides additional safeguards for contract invariants.

a) Global Addressing of Data and Modules: Move, as a smart contract language, introduces a unique approach to data management on the blockchain. It allows for global addressing of data and modules, meaning that data (resources) and code (modules) are stored in a global, decentralized namespace that can be accessed and manipulated through transactions making it more straightforward and secure.

b) Native Support for Parallel Execution: The Move parallel data model inherently supports the ability to execute transactions in parallel, provided they do not have overlapping conflicts in data and accounts.

c) Reordering for Reduced Conflicts and Improved Concurrency: Given the pipelined design, Aptos can dynamically reorder transactions within a group to minimize conflicts. By identifying transactions that do not interfere with each other’s data and account accesses, the system can rearrange the execution order to maximize parallel processing.

All of the above lead to cheaper gas making Aptos a perfect candidate to onboard the next billion users.

DeFi Opportunities :

At Joule, we believe that liquidity should become a commodity that every user and new dapp could leverage. Users shall benefit from yield aggregation options that Joule platform aims to provide. Considering all the benefits of Aptos, we see enormous opportunities to build new DeFi dapps.

  • Bridging foreign liquidity — from EVM chains to Aptos and utilizing such liquidity to create sustainable money markets.
  • Lower gas fees, combined with high throughput and low latency is leading us to create efficient yield aggregation leveraging various DeFi protocols and DEXs.
  • Yield farming is highly popular especially during the bull markets. Money markets allow holding onto the large-caps or relatively stable assets while taking a punt on the long tail assets with the borrowed liquidity. Allowing users to yield-farm with leverage while sharing part of their profit with the lender is a unique positioning for Joule.
  • Liquidity should be a commodity accessible to everyone. One of the biggest challenges for DeFi protocols nowadays is to bootstrap initial liquidity and consistently source it in order to grow. This leads protocols to independently source liquidity themselves spending a significant amount of their native token supply on incentives to source liquidity. Such approaches are unsustainable in the long term and lead to liquidity fragmentation. To resolve this issue, new protocols can seamlessly tap into a large source of composable liquidity present within Joule through anchors/hooks.
  • Ethereum and similar networks use a more pseudo-random selection process for validators. This approach aims to distribute the opportunity to build blocks and earn rewards more equitably across a wider pool of validators. However, the pseudo-random nature of validator selection also introduces unpredictability into the network. In the case of Aptos, transaction ordering is fully dependent on validators selected as leaders. With a deterministic leader schedule, certain validators can build more blocks and earn greater rewards.
  • These validators often accrue even more stake. Additionally, given rigorous minimum token holding requirements for staking and state access create advantages for staking and LSTs. There’s also an opportunity to embrace an equivalent to Ethereum’s shared security / restaking layer, enabling projects with access to the best validators to further increase their yields via restaking.
  • As Aptos operates on a multi-proposer consensus algorithm, current MEV research, which has been focused on Ethereum and Solana, seems incomplete. Many researchers are now exploring how MEV might unfold in blockchains that use this type of consensus algorithm..

The Aptos blockchain is bringing new and powerful technology that solves major issues around scalability, decentralization, and performance. This opens up huge opportunities in decentralized finance (DeFi) — allowing projects to create sustainable Defi projects and ultimately grow the Web3 user base into the billions. This blockchain is positioned to drive innovation that pushes DeFi and Web3 into the future.

To know more about Joule Finance — Check our website : https://www.joule.finance/