Aptos VS Arbitrum: Which is the Better Network?
Published June 12th, 2023
In the rapidly evolving world of cryptocurrency, scalability and efficiency are key considerations for blockchain networks. Two prominent solutions, Aptos and Arbitrum, have emerged as contenders, each offering unique features and advantages. So, which is better, Aptos or Arbitrum, and what are their differences and similarities?
Aptos proves to be the superior network when comparing its technological features, decentralization, and tokenomics against Arbitrum. With a throughput of 160k TPS compared to Arbitrum's 2k TPS, lower transaction fees ($0.00604305 vs. $0.05), and a higher percentage of circulating supply released, Aptos demonstrates its technological prowess and cost-effectiveness. While both networks face decentralization concerns, Arbitrum is marginally more decentralized due to its association with the decentralized Ethereum network. Furthermore, Aptos showcases better tokenomics with lower inflation rates, more use cases, and a slightly higher coin burning rate, making it a promising choice for users and investors in the cryptocurrency space. Arbitrum beats Aptos when it comes to interoperability thanks to its EVM compatability.
In this blog, we will delve into a comprehensive comparison between Aptos and Arbitrum, exploring their technological foundations, scalability approaches, and compatibility with existing Ethereum infrastructure.
Let’s get started!
A Summary of Aptos and Arbitrum
Aptos
Aptos is a recently launched blockchain platform that aims to tackle the scalability and energy usage problems found in other blockchain platforms. One of Aptos' standout features is its utilization of the Move programming language, which was created by Facebook's Diem blockchain team.
Move is specifically designed to be a secure language for developing smart contracts, boasting features like automated resource management and a linear type of system. Additionally, Aptos incorporates its own block-STM data structure, optimized to facilitate faster block propagation and efficient storage.
The block-STM within Aptos serves as an execution engine for transactions on the blockchain platform, enhancing the overall performance and scalability of the network. By prioritizing swift block propagation and storage efficiency, Aptos offers a more practical and effective solution for various use cases. This makes it particularly suitable for decentralized finance (DeFi) and non-fungible tokens (NFTs) applications.
While still relatively new and awaiting broader adoption, Aptos stands out with its distinctive features and innovative approach in the ever-evolving realm of blockchain technology. It aims to provide a more sustainable and efficient alternative to existing blockchain platforms, making it a platform worth keeping an eye on.
Arbitrum
Arbitrum is a layer 2 scaling solution for Ethereum that aims to improve the scalability and reduce transaction costs on the Ethereum network. It was developed by Offchain Labs, a company co-founded by Ed Felten, Steven Goldfeder, and Harry Kalodner. While the exact launch date may vary depending on the specific deployment, Arbitrum mainnet was officially launched in August 2021.
In terms of funding, Offchain Labs raised $120 million in a Series B funding round in May 2021. The funding round was led by Lightspeed Venture Partners, with participation from other prominent investors, including Pantera Capital and Ribbit Capital.
Arbitrum utilizes Optimistic Rollup technology, an L2 construction, to achieve its scalability goals. By processing transactions off-chain and submitting a summary to the Ethereum mainnet, Arbitrum significantly increases transaction throughput while leveraging the security of the Ethereum network.
It aims to maintain high compatibility with existing Ethereum smart contracts, allowing developers to deploy their applications on Arbitrum with minimal modifications.
Technology: Similarities and Differences of Aptos and Arbitrum
To figure out which is better we need to compare their technologies. It should be clear that comparing Aptos and Arbitrum directly is sort of like comparing Apples to oranges simply because Aptos is a layer 1 network and Arbitrum is a layer 2 network.
In the table below we compare the technological features of Aptos and Arbitrum.
| Comparison | Aptos | Arbitrum |
|---|---|---|
| MAX TPS throughput | 168,000 | 2000 |
| Network Type | Layer 1 | Layer 2 |
| Consensus Algorithm | Proof of Stake + AptosBFTv4 + Bullshark | N/A |
| AVG Basic transaction fee | 0.000585 APT Or about $0.00604305 |
$0.05 |
| Virtual Machine Name | Move Virtual Machine | EVM |
| EVM Compatibility | No | Yes |
| Main Smart Contract Language | Core – Move | Solidity |
| Block Production Time | 333 milliseconds | 250 milliseconds |
| On-Chain Governance? | Yes | Yes |
| Modular Architecture? | Yes | Yes |
| Other Features? |
|
|
Analysis
Now we analyze the technology of Aptos and Arbitrum and compare the two. Moreover, these two blockchain networks are very different.
First of all, Aptos is a layer 1 network. It handles all of its security concerns on its own. It has validators that validate and finalize transactions. It serves as its own ecosystem of DApps and users.
The solution that Aptos solves is the issue of high transaction fees and slow transaction throughput, presented by 1st and 2nd generation networks such as Bitcoin and Ethereum.
Arbitrum, on the other hand, is a layer 2 network that serves as a scaling solution for Ethereum. In other words, Arbitrum helps scale Ethereum to quicker throughput and quicker transaction finality, whilst also lowering Ethereum fees and congestion.
Arbitrum Is dependent on Ethereum.
Looking at the transaction processing, it is clear that Aptos is superior to Arbitrum. Aptos has more sophisticated technologies such as its Block-STM execution engine, Narwhal mempool, and MOVE programming language that help it achieve 160k TPS compared to Arbitrium’s 2k max TPS throughput.
Arbitrum does produce blocks somewhat quicker than Aptos. Keep in mind that this is easier since Arbitrum also doesn’t have to worry about security. Arbitrum doesn’t have a consensus algorithm. It relies on Ethereum to validate the transactions.
Secondly, the main advantage that Arbitrum has over Aptos has been that it has Ethereum Data Availability. This means that all data from Ethereum is available within the Arbitrum network.
Arbitrum is also EVM compatible. Ethereum and all Ethereum based assets are easily transferred over to the Arbitrum network. DApps deployed on Ethereum, are also integrateable in Arbitrum.
Arbitrum as a result of being EVM compatible and a Layer 2, has a higher advantage of technological infrastructure since it has more Wallets and DApps. Aptos, because it's a new network, has less technological infrastructure such as wallets and other DApps. Aptos still has decent Wallets and DApps, just not as many great options compared to what Arbitrum has.
Since Ethereum is the 2nd largest cryptocurrency and network with the largest value locked, being EVM compatible is a great advantage of Arbitrum.
Finally, the last major difference between Aptos and Arbitrum is that Aptos has lower transaction fees of about $0.00604305 compared to Arbitrum which charges $0.05 for a simple transfer.
Arbitrum has validators like Aptos, though they only advance the state of Arbitrum. They propose blocks and rearrange blocks if they see fraudulent transactions. Moreover, security concerns are still implemented by Ethereum.
Decentralization: Arbitrum VS Aptos
Decentralization is a major concern of blockchain networks. This is one of the core ethos of cryptocurrencies. The best decentralized networks often are more trusted and used than less decentralized networks.
When it comes to decentralization how does Arbitrum compare to Aptos? Let’s find that out in this section.
Because Aptos and Arbitrum have different architectures(L1 vs L2) we can’t use a simple table to compare their decentralization. Instead, we use a comparison chart to compare them.
One of the major negatives with decentralization in Arbitrum is that the foundation doesn’t actually respect the vote outcomes when people of the community vote.
On April 2nd, the Arbitrum Foundation created a proposal called AIP-1 to allocate 750 Million ARB tokens for admin and operational costs. Instead, community Arbitrum holders voted against it. The Arbitrum Foundation went through with it and spent 50.5 Million of the 750 Million tokens.
This exemplifies how voting in Arbitrum doesn’t really matter if the foundation ignores the outcomes of the vote. Furthermore, if voting doesn’t matter, then Arbitrum doesn’t have decentralized governance.
We can see how this happened with Twitter user Eden AU and his Twitter post.
Arbitrum Foundation made a proposal (AIP-1) to allocate 750M ARB tokens for admin and op costs, but $ARB holders voted against it
— Eden Au (@0xedenau) April 2, 2023
Now they said the vote was just a formality, and they have already spent 50.5M (6.7%) of the proposed 750M $ARB
Your vote is not vote pic.twitter.com/lvhBbBesum
The Arbitrum Foundation responded to this fund and then said that they took a loan on it, while also liquidating 10 Million ARB tokens.
5/ To address two key questions that are asked: 1) The Foundation did not sell 50M $ARB tokens and 2) the rationale behind an initial allocation of 750M $ARB was covered in significant detail in the forum post above.
— Arbitrum (💙,🧡) (@arbitrum) April 2, 2023
While Arbitrum has its governance debacle, Aptos has its own deal of issues to deal with.
Of all of the Aptos validators, the majority of them are controlled by Aptos Labs. Some of the validators are also managed by 3rd party validator custodians. They manage these validators and the assets within them.
You can find out more about this in our other article that goes more in depth about the decentralization of Aptos. Moreover, if most validators on Aptos are controlled by Aptos Labs, we can conclude that Aptos isn’t as decentralized as it appears to be.
All – in All we can see that when it comes to decentralization, Arbitrum and Aptos aren’t as decentralized as they appear to be. Moreover, Because Ethereum is still very decentralized, Arbitrum is marginally more decentralized than Aptos.
This is one of the benefits that Arbitrum has of being a layer 2 network, as opposed to a layer 1.
Which has Superior Tokenomics: Aptos VS Arbitrum
Another metric that can be used to compare networks is tokenomics or Token economics. These are basically the factors that influence the economies and value of Aptos and Arbitrum as cryptocurrencies.
Cryptocurrencies with better tokenomics often accrue value faster than tokens with terrible tokenomics. Tokenomics also influences how well cryptocurrencies drop when the overall crypto ecosystem is in a bear market.
In the table below, we compare Aptos and Arbitrum from a Tokenomics perspective. We compare all of the tokenomic traits to figure out which cryptocurrency has superior tokenomics.
| Comparison | Aptos | Arbitrum |
|---|---|---|
| Circulating Supply (As of June 2023) | 200.8 Million APT | 1.275 Billion ARB |
| Total Supply (as of June 2023) | 1.038 Billion | 10 Billion |
| Circulating Supply of Total Supply Percentage (As of June 2023) [Higher is better] | 19.25% | 12.75% |
| General Inflation Rate (as a result of coin minting) (2023) | 6.9999% | 0 |
| Circulating Supply Inflation (2023) | 41.53 | 37.64% |
| Circulating Supply Inflation (2024) | 117.93% | 157.6% |
| Circulating Supply Inflation (2025) | 36.65% | 42.8% |
| Points of Demand / Use Cases |
|
|
| Burning Mechanism? | Burns All Transaction Fees | No |
| Burn Rate / Total Tokens Burned | About 100-250 APT per month at current TX rates | N/A |
NOTE: We define circulating supply inflation as the inflation of the circulation supply as a result of token unlocking and coin minting.
Analysis
Using the table above we can finally compare Aptos and Arbitrum when it comes to Tokenomics. The first metric is the Circulating Supply of Total Supply percentage (CSTSP). This metric indicates how much of the total supply has been unlocked and released.
When cryptocurrency projects are in their beginning phases, they lock up tokens and vest them for years. Usually, the foundation locks these tokens for certain parties such as seed investors, the foundation themselves, and other parties.
After some time, the tokens get unlocked and are used as capital to continuously fund the project or for the team to take profits. Investors also get their fair share unlocked. The point is that these tokens, once unlocked, find their way into the market creating sell-side pressure.
Tokens with a larger percentage of circulating supply released are better because there are much fewer parties that unlock tokens and then sell them on the market. This benefits retail investors or holders of the token.
When it comes to Aptos and Arbitrum it is clear that Aptos has a higher CSTSP metric. This metric shows us that in the short term, holding Aptos is better than holding Arbitrum. Since the percentage is small for both of these tokens, there is more risk in holding them in the short term.
The 2nd metric to see is the general inflation rate. Luckily Arbitrum doesn’t create new tokens. They are all pre-minted and locked up. Aptos on the other hand started with an inflation of 7% and went down as the supply went up similar to Bitcoin.
As a result of the CSTSP being low, we mentioned that tokens get unlocked slowly. Since these coins get unlocked, the circulating supply inflation goes up by large quantities. We can see that in 2024, the circulating supply of Aptos is set to increase by 117.93%. For Arbitrum the circulating supply increases by 157.6%.
All in all, we can see that Aptos has a lower CSTSP making it a better pick for short-term holding as opposed to Arbitrum. Holding Aptos in the short term may not be a great idea because of the inflation. There is too much risk with this amount of inflation.
Thirdly, the Aptos coin has more use-cases than Arbitrum. Aptos coins have more points of demand than Arbitrum coins. This inevitably puts more upward pressure on Aptos than on Arbitrum. This can translate to more price appreciation for Aptos than for Arbitrum.
Popular revenue streams such as staking create more demand for Aptos since Aptos needs to be purchased and obtained to generate revenue through staking.
Related: Stake Aptos through Ledger Hardware devices.
Lastly, one important tokenomic factor is coin burning. Coin burning helps improve price performance because the supply is reduced. Lower supply causes prices to increase as the assets become scarcer. Aptos isn’t burning much, but still burns more than Arbitrum. We can conclude from this coin burning feature that Aptos has better tokenomics than Arbitrum.
Our Conclusion: Which is Better?
After analyzing the technological features, decentralization aspects, and tokenomics of Aptos and Arbitrum, it becomes clear that both networks have their strengths and weaknesses. However, when considering which network is better, Aptos emerges as the superior choice.
In terms of technology, Aptos, being a layer 1 network, offers more sophisticated features such as the Block-STM execution engine, Narwhal mempool, and the MOVE programming language. These advancements enable Aptos to achieve a significantly higher throughput of 160k TPS compared to Arbitrum's maximum throughput of 2k TPS. Additionally, Aptos has lower transaction fees, providing a more cost-effective solution for users.
Decentralization plays a vital role in blockchain networks, and while neither Aptos nor Arbitrum can be considered highly decentralized, Arbitrum's governance debacle raises concerns. The Arbitrum Foundation disregarded the outcomes of a community vote, indicating a lack of decentralized governance.
Aptos, on the other hand, faces centralization concerns with a majority of validators controlled by Aptos Labs. However, being built on the Ethereum network, Arbitrum benefits from Ethereum's existing decentralization, making it marginally more decentralized than Aptos.
When assessing tokenomics, Aptos proves to have superior characteristics. With a higher percentage of circulating supply released, lower inflation rates, more use cases, and a slightly higher coin burning rate, Aptos demonstrates better token economics, which can lead to increased value and price appreciation.
Finally, the one advantage that Arbitrum has is its interoperability with EVM networks. Its EVM compatability and Layer 2 Dominance is its greatest weapon against Aptos.