What is Axelar (AXL) - A Comprehensive Overview

Why is Axelar required?

The fragmentation of liquidity, services, and users creates friction across ecosystems and sovereign networks.

Axelar’s technology allows functions that are more complex than simply transferring wrapped assets to another chain.

The focus is on full-stack interoperability - meaning that permissionless programmability, executing smart contracts, and dApps that work across networks are supported in addition to bridging any information/asset.

How does Axelar work?

Axelar Network uses a decentralized routing protocol to facilitate cross-chain communication. It makes use of validators and relayers to transmit information securely between different blockchains.

With the help of cryptography and consensus mechanisms, Axelar makes sure that the integrity and security of cross-chain transactions are maintained.

Three components make up the tech stack of Axelar:

• Delegated proof-of-stake (DPoS) consensus mechanism: Holders of $AXL can delegate their stakes to validators, who will verify requests from the source chain (Axelar) and confirm execution on the destination chain.
  The voting powers of validators are proportional to the volume of staked tokens. The stake is also then used to verify the accuracy of cross-chain transactions.

• Gateway smart contracts: The validators use gateways to find, analyse and confirm transactions on the network, ensuring seamless cross-chain transfer. Connected applications communicate using their smart contracts.

• APIs and SDK developer tools: To build scalable and interoperable cross-chain dApps across various networks. Using Axelar’s General Message Passing (GMP) model, developers can also synchronise their transactions on Axelar. It includes services like:

  • Axelar Gas Services automates conversions into AXL and destination-chain gas tokens.

  • One-time deposit addresses automate routing, allowing applications to expose a simple deposit address. This is a decentralized version of the onramp used by centralized exchanges.

  • Developer tools like the Interchain Token Service which enables developers to issue and manage Interchain Tokens. This maintains their fungibility and custom functionality across chains.

The AXL Token and Tokenomics

What is AXL Token ?

The token was launched in 2022 with an initial supply of 1 billion. The tokens held by the team will finish vesting in 2026.

The staking rewards make the token inflationary but this can change if the holders vote to change the tokenomics model.

The native token of the Axelar blockchain is used in the following ways:

• Paying Transaction Fees: Services built on top of the programmable interoperability layer like developer automation, and cross-chain gas conversions are paid in AXL. Also, these tokens can be converted into the required gas tokens for connected chains.

• Staking or delegating: This allows holders to participate in consensus and to reward consensus participants.

• Voting: Holders of AXL can vote on governance proposals

AXL Tokenomics

At genesis, the AXL tokens were issued and allocated in the following manner:

• Core Team (17%): Existing employees and advisors

• Company (12.5%): Axelar Inc. operational treasury and future employee incentives

• Backers (29.5%): Seed (13.4%), Series A (12.64%) and Series B (3.5%) investors

• Community Sale (5%): The public sale after the mainnet launch has the objective of distributing tokens to community members.

• Community Programs (36%): Includes liquidity rewards, testnet/dashboard/wallet/developer grants, managed by the Axelar Foundation. At least 5% of this supply has been allocated towards an insurance fund.

How is Axelar used?

Axelar (AXL) is used in several key ways within the Axelar network.

Staking and Security

Tokenholders stake AXL to contribute to network security and earn rewards in return.

This staking process helps maintain the security of the network by incentivizing validators to participate and ensure the integrity of transactions.

Axelar Governance

AXL holders can vote on proposals such as parameter changes or protocol upgrades, allowing them to participate in the Axelar governance.

Transaction Fees

AXL is used to pay transaction fees, but network users do not need to hold the token themselves.

The backend smart contracts handle conversions, ensuring users pay gas fees only once, in the source-chain token.

Incentives

AXL provides incentives to validators, developers, and users to maintain and grow the network, ensuring its longevity and ecosystem growth.

Cross-Chain Operations

AXL facilitates cross-chain transactions and interactions, enabling seamless communication and data exchange between different blockchain ecosystems.

These uses of AXL are crucial to the functioning and growth of the Axelar network, which aims to enhance interoperability and scalability across blockchain platforms.

How to stake Axelar?

By staking Axelar, you are supporting a full-stack interoperability platform that scales securely to all Web3 applications. Here’s how you stake your AXL.

Own native AXL

You can store native AXL on a wallet that is a Cosmos-compatible wallet that supports staking, like Ledger, Kepler, or Cosmostation. If your AXL is in an EVM wallet like MetaMask, it is wrapped AXL (wAXL).

You can also buy native AXL on centralized exchanges like Bybit, Coinbase, and Gate. If you don’t already have a compatible wallet, you can set one up.

Choose an Axelar validator

At this point, you should have native AXL in your wallet.

Now select the validator to stake your tokens with, we’ve written a comprehensive guide on the best Axelar validators to help you make your choice.

Follow these steps:

1. Open the staking dashboard

2. Select the Axelar Network

3. Choose a validator

4. Click the ‘Stake’ button

Enter amount and approve transaction

In the field under ‘Amount to Stake’, enter the amount you want to stake. If you want to stake all of the AXL in your wallet, click the ‘Max’ button.

You will then see a transaction confirmation window. Click ‘Approve’ and wait for it to complete.

Check Axelarscan

Once your transaction is completed, you can click the link in your wallet to see the transaction hash on Axelarscan.

While your AXL is staked, you can’t use it for anything else. If you do change your mind, you can undelegate it. This process will take up to 7 days and will affect your rewards. You will also incur a small gas fee for the transaction.

We’ve written a comprehensive guide on the best Axelar validators to help you make your choice.

Team Behind Axelar

The Axelar project was initially developed by Interops Labs; a team of blockchain experts led by co-founder Sergey Gorbunov. The mission of the Axelar Foundation is to promote the growth and adoption of Axelar. The other co-founder of Axelar, Georgios Vlachos is a director.

Both founders have previously worked at Algorand and when the project was started, the multiple blockchain networks could not connect with each other.