Axelar

Axelar (AXL) is a decentralized platform developed by the founders of Algorand to support decentralized application (DApp) developers. The platform was founded in 2020 in Waterloo, Canada, with the goal of tackling the fragmentation in the blockchain sphere by creating a secure and seamless avenue for communication across blockchain networks.

Axelar is a programmable interoperability network that enables effortless communication between different blockchain ecosystems, making it a unique tool for developers and end-users alike. The platform supports smart contracts, which sets it apart from other cross-chain networks, providing true chain abstraction with minimal overhead.

The native token of the Axelar network is AXL, a proof-of-stake token that powers the network's functionality. AXL tokenholders provide decentralized security and governance and receive rewards and fees. The token can be staked, bought, sold, and traded on exchanges.

As of May 3, 2024, there were 647.6 million AXL in circulation, out of a total supply of 1.15 billion. The top 10 holders owned 67% of the total supply, with one wallet holding 18.52% of the supply.

Axelar has announced collaborations, such as with Ripple, to create a more interconnected blockchain ecosystem, allowing developers to explore new possibilities for applications. The platform has also received significant funding, with a total funding amount of $113.75 million and a post-money valuation of $1 billion.

Overall, Axelar aims to revolutionize Web3 by providing a unified platform for developers to build and deploy applications across different blockchain networks, promoting interoperability and scalability in the decentralized technology space.

Axelar is a blockchain that connects other blockchains, enabling robust cross-chain communication and creating an "internet of blockchains" as a universal development platform. It achieves this through a proof-of-stake consensus mechanism, which relies on a dynamic set of validators who stake the AXL token to secure the network and earn rewards. This approach ensures decentralization and minimizes the risk of network compromise.

1. AXL Token:

   • Native Token: The AXL token is the native cryptocurrency of the Axelar Network, facilitating incentive and fee payments to validators and stakers.
   • Staking and Security: Token holders stake AXL, contributing to network security and earning rewards in return.
   • Governance: AXL holders can vote on proposals such as parameter changes or protocol upgrades.
   • Transaction Fees: AXL is used to pay transaction fees, but network users don't need to hold the token themselves. The backend smart contracts handle conversions, ensuring users pay gas fees only once, in the source-chain token.

2. Validators:

   • Proof-of-Stake Consensus: Validators stake AXL tokens and participate in producing new blocks, multiparty signing, and voting on external chain states.
   • Incentivization: Validators are incentivized through rewards paid in AXL tokens, aligning their interests with network security.

3. Cross-Chain Communication:

• General Message Passing (GMP): Facilitates secure, Turing-complete cross-chain computation, enabling seamless interactions between different blockchain ecosystems.
• Programmable Infrastructure: The Axelar network supports smart-contract logic, allowing developers to automate tasks and experiences across multiple blockchains.

To stake AXL tokens, users need to follow these steps:

1. Obtain Native AXL: Ensure you have native AXL tokens in a Cosmos-compatible wallet, such as Ledger, Keplr, or Cosmostation. If you hold wrapped AXL, you can convert it to native AXL using Squid, a liquidity router built on Axelar.

2. Choose a Validator: Select a validator to stake your tokens with on the Axelar network. This can be done through the staking dashboard in your wallet.

3. Enter the Amount and Approve Transaction: Enter the amount you wish to stake and approve the transaction. This will complete the staking process.

Axelar incorporates various safety measures to ensure the security and resilience of its network:

• Code Audits: Regular audits to identify and fix vulnerabilities.
• Bug Bounties: Incentivizing the discovery and reporting of bugs.
• Rate Limits: Limiting the frequency of transactions to prevent abuse.

Axelar has achieved significant milestones, including:

• Strategic Partnerships: Collaborations with major blockchain ecosystems and projects, such as Arbitrum, Optimism, Polygon, and Lido.
• Cross-Chain Transactions: Handling over $1.6 billion in transfers and more than 300,000 transactions.
• Interoperability: Enabling interchain NFTs and simplifying user experiences through General Message Passing.

Overall, Axelar's technology is designed to create a robust, decentralized, and scalable cross-chain communication platform, fostering a more integrated and cohesive Web3 landscape.

Axelar (AXL) has several strengths that make it an attractive solution for interoperability in the crypto space:

1. Cross-Chain Interoperability: Axelar enables seamless communication and data transfer between different blockchain networks, both public and private. This allows developers to create multi-chain DApps and cross-chain DEXs or AMMs, increasing liquidity and functionality.

2. Ease of Onboarding: The network simplifies the onboarding process for developers by eliminating the need to learn new programming languages. This makes it easier for developers from slower blockchains to expand their DApps onto the Axelar system.

3. Scalability: Axelar's programmable interoperability network supports the development of advanced DApps and cross-chain capabilities, enhancing performance and scalability.

4. Security: The AXL token is designed to provide incentives for validators to participate, ensuring decentralization and security within the network. The token also supports governance decisions and is used to pay transaction fees.

5. Institutional-Grade Staking: Axelar offers robust staking services through partners like Stakin, providing institutional-grade staking solutions with high uptime guarantees, dedicated account management, and boosted yields through connections with multiple chains.

6. Programmability: The AXL token supports smart-contract functionality, enabling a programmable interchain layer that allows for advanced developer tooling and an open marketplace of services.

These strengths position Axelar as a comprehensive solution for interoperability, scalability, and security in the Web3 ecosystem.

Axelar (AXL) faces several risks, including token-related risks, technical security risks, and risks associated with its cross-chain bridge protocol.

Token-related risks refer to the potential for loss or negative impact on a blockchain network's native token or other tokens within its ecosystem. This type of risk is inherent in any decentralized system that relies on token economics, where tokens serve as a means of value transfer, governance, and incentivization.

• Initial Token Distribution: The initial token distribution of Axelar has a degree of stickiness, with 59% allocated to individuals closely associated with the project and 41% distributed to the community. This distribution can impact decentralization and the concentration of voting power among validators.

Technical security risks involve potential vulnerabilities in the network's architecture and smart contracts. Axelar has implemented various measures to mitigate these risks, including:

• Rate Limits: The network has rate limiting functions to cap the transfer of major assets like USDC, FRAX, and ETH in a given time interval.
• Key Rotations: Validators are required to rotate their keys periodically to secure the network against persistent attackers.
• Audits: The network code undergoes continuous and rigorous audits, and it is open-source, encouraging comments and revisions from white-hat hackers.

Cross-chain bridges, including Axelar's Satellite bridge, are vulnerable to security breaches, which can lead to significant asset theft. Since 2016, around $2.5 billion has been stolen from DeFi platforms due to bridge security compromises. Vitalik Buterin, co-founder of Ethereum, has noted the risks inherent in cross-chain bridges, emphasizing the need for a unified data and security layer.

Axelar receives a high risk rating from InvestorsObserver due to its potential for price manipulation based on recent changes in volume and market cap.

• Sergey Gorbunov: Co-founder & CEO of Axelar, previously worked on the core platform design and development at Algorand.
• Georgios Vlachos: Co-founder of Axelar, designed the Algorand consensus protocol and is a key figure in the development of Axelar.
• Jason Rozovsky: Director of Business Development at Axelar.
• Jason Ma: Head of Legal at Axelar.
• Ed Medvedev: Head of DeFi at Axelar.
• Stephen Fluin: Head of Engineering at Axelar.

These individuals form the core team behind Axelar, driving its mission to provide complete blockchain interoperability solutions.