Pathfinder 2E Challenge and XP are overstated

[Velderan]

4th level monster is that a moderate challenge? I think we experienced a better challenge when solos were extreme or severe rated.

That's more a complaint about the AP than the system IMO. In the case of the encounter @cranberry is mentioning, the party doesn't have a time crunch after the moderate encounter and can take their time recovering before moving on. It's entirely likely the party goes to sleep in an inn after this fight before setting out in the morning, so the encounter really should have been a severe encounter IMO.

As for the thread topic, I would advise HIGHLY against reducing xp awards unless your group loves combat after combat and you're prepared to add a bunch of encounters to make sure they're leveling as they should be. After 2+ years running PF2e nearly weekly, I haven't seen any huge issues with the encounter building rules even for individual monsters. Moderate encounters are designed to challenge the players to use good tactics, but also enable them to immediately move on to the next encounter WITHOUT stopping to recover resources. The group I GM for usually goes through 3-4 moderate encounters before considering a stop to recover HP or focus points. A severe encounter usually results in 10 minutes of downtime for some first aid and focus point recovery, even if it's just a single monster. While it is true things like Daze can hurt a monster's action economy, it's also true that the game's math makes it less likely for a monster strong enough to be an encounter of appropriate challenge on its own will be less likely to critically fail the basic Will save to end up stunned 1 to begin with.

I promise you there will be single monster encounters in Abomination Vaults that if played correctly will challenge a party of 4, but they will be rated as severe or extreme.

 

[SpellObjectEnthusiast]

Note the description of a Moderate encounter:
"Moderate-threat encounters are a serious challenge to the characters, though unlikely to overpower them completely. Characters usually need to use sound tactics and manage their resources wisely to come out of a moderate-threat encounter ready to continue on and face a harder challenge without resting."

So a moderate encounter should be somewhat challenging but have an extremely low chance of the party losing. Good tactics, resource expenditure (high level spells, consumables), and/or good luck will mean the party will complete the encounter without losing enough health to require resting. Bad luck, stingy resource expenditure, and/or poor tactics will mean the party will take a beating and need to rest before they can adequately handle another encounter.

Seems to be working as intended.