Axelar Network (AXL): Building Full-Stack Interoperability for the Future of Web3

Author: Axelar Network

With the approval of the Bitcoin spot ETF, the crypto industry has experienced a historic moment. Currently, the market's focus is gradually shifting back from price movements to industry innovation and long-term growth.

A new batch of Layer 2 and Layer 1 solutions is competing to make strides, and the ancient phrase "multi-chain ecosystem" has once again become a new topic in the crypto market. As the hot public chains in the market change, the development of industry infrastructure will also undergo significant transformations alongside the flourishing of ecosystems.

Today, in the rapidly evolving Web3 world, interoperability is more important than ever. This includes not only cross-chain asset liquidity but also the transmission of cross-chain information.

Odaily Planet Daily recently focused on Axelar Network (AXL), which is creating a more interconnected Web3 infrastructure to build a solid technical foundation for the upcoming large-scale adoption of Web3.

Why does cross-chain infrastructure need innovation?

The fervor of the past DeFi Summer brought concepts like DeFi, multi-chain, and cross-chain to the forefront. Now, as we move into the "post-ETF era" of 2024, some investors may wonder if these "old" concepts can still find a place in the market.

The answer is yes. As the infrastructure of the multi-chain era, cross-chain interoperability protocols are not only still active in the market but are also increasingly embedded in the ecosystem's foundation. They provide services directly to retail investors and leverage the composability of the crypto ecosystem to integrate various protocols, offering new users a user-friendly and seamless experience.

Data from Dune Analytics and Binance Research shows that since the end of 2022, the transaction volume of cross-chain communication protocols has significantly increased, reaching a historical high in the third quarter of 2023.

Image source: Binance Research, data as of November 17, 2023

Clearly, the surge in cross-chain activities is significantly driven by multiple factors, including market recovery, the growth of new networks, and the renewed activity of applications. This also indicates that this ancient DeFi phrase is returning to the center of the market.

In this round of cross-chain growth, new transformations and innovations have emerged, differing from the previous cycle. As the market matures, developers' exploration of cross-chain technology has gradually improved, leading to valuable practices. Among various cross-chain-related products, Axelar Network (AXL) stands out as a unique entity.

Axelar Network (AXL) now supports over 56 major public chains, including mainstream EVM networks like Ethereum, BNB Chain, and Polygon, as well as Layer 2 solutions like Base, Arbitrum, and Optimism, and non-EVM networks like Cosmos.

Binance Research tracked the support of mainstream cross-chain interoperability protocols for 60 major networks and found that Axelar Network (AXL) supports 53 of them, ranking first in the number of supported networks.

Image source: Binance Research, data as of November 17, 2023

Since 2023, the popularity of Axelar Network (AXL) has surged, with both transaction volume and active user numbers increasing. Based on this liquidity, transactions settled on Axelar Network (AXL) are faster than those on a single blockchain. Currently, DEXs have achieved capabilities similar to CEXs: trading any token across any chain.

Image source: Binance Research, as of November 17, 2023

Official data from Axelar Network (AXL) shows that the total trading volume generated by a group of DEXs collaborating with Axelar Network (AXL) has accounted for more than half of the total trading volume of DEXs. Georgios Vlachos, co-founder of Axelar Network (AXL), believes that "the rise in adoption levels demonstrates the utility of the Axelar Network (AXL) for DEXs, which are building a seamless user experience for large-scale adoption."

With the infrastructure and cross-chain capabilities of Axelar Network (AXL), users can easily access and trade assets across different chains, allowing the industry to benefit and embrace the upcoming large-scale adoption of Web3 and a more interconnected, interoperable crypto ecosystem.

How is Axelar Network (AXL) changing the way competition is conducted?

As the application layer evolves, the Web3 ecosystem is gaining more use cases, which brings new demands. The information that needs to be transmitted for inter-chain interoperability is not just assets but also data.

Odaily Planet Daily noted an interesting "old news." Back in 2022, Georgios Vlachos stated at a public event that the vision of Axelar Network (AXL) from the beginning was to allow different blockchains to focus on different use cases. Moreover, Axelar Network (AXL) is not just a cross-chain bridge; it is also a layer for cross-chain information transmission, allowing users to build various applications on it.

At that time, the team observed that most cross-chain bridges in the market were paired between two chains and could only transmit assets.

Through its General Message Passing ("GMP") functionality, Axelar Network (AXL) can support complex cross-chain function calls and state synchronization. Interoperability is no longer limited to the "asset" domain, which stimulates the composability of the entire Web3 ecosystem. Of course, this also promotes the increased usage of Axelar Network (AXL).

Recently, the popular Ondo Finance is a typical example demonstrating the utility of GMP. The RWA platform Ondo Finance integrated the GMP functionality to develop a bridge, achieving unified on-chain USDY liquidity. This allows users to manage their multi-chain liquidity on a single network.

In addition to inter-chain communication, active integration with partners is another reason for the rapid progress of Axelar Network (AXL). Over the past year, Axelar Network (AXL) has achieved impressive results. Several leading DEXs, including dYdX, Vertex, and PancakeSwap, have integrated Axelar Network (AXL) as their backend.

Unlike other cross-chain bridges directly targeting retail investors, Axelar Network (AXL) has done more work on the backend, which is invisible to users. Axelar Network (AXL) actively integrates with dApps, aiming to provide users with a seamless liquidity cross-chain experience.

In September 2023, dYdX v4 completed integration with Axelar Network (AXL). By leveraging Axelar Network (AXL)'s cross-chain services and Squid, users can more conveniently deposit and withdraw on dYdX, completing fiat currency exchanges in just one step.

In November 2023, Uniswap also completed integration with Axelar Network (AXL). Uniswap chose to use Axelar Network (AXL) as a secure solution for managing its cross-chain governance. Prior to this, there had been heated debates over Uniswap's governance bridge choice. Axelar Network (AXL)'s Interchain Governance Orchestrator framework provided a reliable option. It allows developers to execute governance actions for all their deployments from one place, simplifying the complex process of managing multi-chain dApps. Uniswap V3 was deployed on the Filecoin Virtual Machine (FVM) based on this framework.

On January 17 of this year, the cross-chain bridge controversy involving Lido finally came to an end, with Axelar & Wormhole winning the vote by a large margin. In October 2023, LayerZero established a stETH cross-chain bridge and sought approval from the Lido DAO. However, LayerZero deployed the bridge before formal approval. Due to LayerZero's improper marketing approach, this incident sparked widespread controversy.

Lido DAO initiated a temperature check vote, and the results showed that Axelar & Wormhole received 81.1% support as the developers of the wstETH cross-chain bridge for BNB Chain. This result reflects the community's preference for transparency and consensus in decentralized networks, and the high support rate indicates that Axelar is well-regarded by the community.

At the end of January this year, Axelar Network completed integration with Immutable. This allows games on Immutable zkEVM to attract players from across the Ethereum ecosystem. By integrating with Axelar Network, games built on Immutable zkEVM can span over 56 blockchain networks, embedding programmability, security, and scalability within the cross-chain network layer.

Of course, from the perspective of traditional companies, Axelar is also a trusted partner, whether it is a traditional financial giant like JPMorgan or a tech giant like Microsoft.

As early as November 2023, JPMorgan collaborated with Axelar and several other blockchain companies to conduct a proof of concept for the tokenization of funds. JPMorgan's Onyx Digital Assets partnered with the interoperability layer Axelar, infrastructure provider Oasis Pro, and Provenance Blockchain to manage large-scale client portfolios, execute transactions, and automate the management of tokenized assets.

In July 2023, Axelar established a partnership with Microsoft to better integrate Web3 and traditional internet systems. The two parties will explore how blockchain can help ensure trust and accelerate the integration of AI into mainstream use cases. They will jointly promote blockchain adoption by building data integration and interoperability layers, lowering the barriers to entry into blockchain.

For the latest developments on Axelar Network (AXL), you can check its official X.

Gas Pricing Reform: The Key to AXL's Takeoff?

In Axelar's 2024 roadmap, there are numerous important updates. However, the one that may resonate most with token holders is the reform of the gas pricing mechanism.

The gas pricing reform will improve the accuracy of estimating cross-chain gas fees on the Axelar Network (AXL).

In Axelar's roadmap, we discovered a brand-new gas burning mechanism that could lead to network deflation, further protecting the Axelar Network (AXL).

Or to put it more simply—after the update, the AXL token economic model can enhance the utility of AXL tokens as the Axelar network scales, strengthening the value capture for the network. As new chain activities increase, an additional step will be added in the process, where gas will need to be burned between the gas receiver and the network. This also implies a clear expectation—over the long term, AXL will generally become deflationary.

Another benefit for the network is that the gas pricing reform will enhance the accuracy of estimating cross-chain gas fees on the Axelar Network (AXL).

As the multi-chain world becomes increasingly robust, we are seeing more and more new networks. Axelar serves as a permissionless connecting component to link them. When Axelar connects to a new network, it requires support from Axelar developers and votes from Axelar validators. This could become an important driver of demand for AXL tokens.

The Future of Cross-Chain: Full-Stack Interoperability

After significant progress in 2023, Axelar Network (AXL) has a long way to go in 2024.

Axelar Network (AXL) has chosen the challenging concept of full-stack interoperability. This is a way to build a Web3 that existing internet infrastructure cannot support. With the developers' efforts, functional dApps that are easy to use and resemble traditional internet application experiences will be built together.

To elaborate, full-stack interoperability means that Axelar Network (AXL) supports not only the "asset" cross-chain of traditional bridges but also the interoperability of "information," and it further supports permissionless coverage of "programmability," execution of smart contracts, and cross-network dApps.

This grand vision is being executed step by step in Axelar Network (AXL)'s 2024 roadmap.

The Axelar Network (AXL) virtual machine is the most important part of the 2024 plan.

With the support of Cosmwasm, the Axelar Network (AXL) virtual machine will transform interoperability into a programmable layer. It enables developers to write smart contracts on Axelar Network (AXL) while extending their cross-chain deployments and "programming" the cross-chain network layer. The Axelar Network (AXL) virtual machine (AVM) is developed based on Cosmwasm, converting interoperability into a programmable layer.

Specifically, the Axelar Network (AXL) virtual machine will allow developers to build their dApps on EVM, Cairo VM, Cosmos, or other ecosystems and run them across all chains. AVM inherits almost all mainstream consensus mechanisms in the crypto world, including Solana, Stellar, and Move-based Aptos and Sui.

This makes it easier for developers to scale their cross-chain projects while abstracting cross-chain tasks (such as token swaps) to reduce the burden on developers. It provides a more straightforward way for developers to deploy cross-chain projects, allowing them to cover all mainstream consensus with one development effort. Convenient cross-chain links can amplify potential network effects and connect to the currently thriving multi-chain ecosystem.

Moreover, AVM is a complex system, and its appeal goes beyond that. Once AVM is fully deployed, this system will include Interchain Token Service (ITS), Interchain Amplifier, and Interchain Maestro. This suite of tools can provide developers with richer Web3 composability.

Specifically, interchain tokens expand native fungibility and customization across all connected chains. ITS allows tokens to cross-chain while maintaining their native properties, providing teams with an easy way to mint tokens and manage supply and functionality.

The Interchain Amplifier connects any chain permissionlessly, simplifying the process of supporting new chains by incentivizing validators and aggregating AXL tokens from third-party sources.

The Interchain Maestro tool enables developers to deploy and manage multi-chain dApp instances. Build once, run anywhere.

Convenient cross-chain links can amplify potential network effects and connect to the currently thriving multi-chain ecosystem.

In terms of data results, Axelarscan shows that on the 56 supported chains, Axelar Network (AXL) has completed 1.26 million transactions, with a transaction volume exceeding $7.5 billion, and deployed 525 inter-chain contracts.

In the future, as the Layer 2 ecosystem flourishes, we may have hundreds or even thousands of different blockchain networks. In the increasingly complex multi-chain ecosystem, how developers deploy applications and how users interact with applications will become a complex and multi-dimensional challenge.

Axelar Network (AXL) provides its vision—users and developers do not need to care about where the dApp is deployed. Developers only need to use the full-stack interoperable Axelar Network (AXL) protocol to achieve one-time deployment across multiple chains. Users also do not need to worry about which network they need to operate; Axelar Network (AXL) will provide a seamless multi-chain interaction experience.

Perhaps this is the future of Web3 we envision, a world no longer limited by a single blockchain. It brings full-stack interoperability into the crypto ecosystem, providing developers with unprecedented freedom while offering users a seamless cross-chain experience. Everyone can focus on the powerful dApp itself, freely navigating the multi-chain world of Web3.

The crypto world is already filled with innovation and transformation, and Axelar Network (AXL) is paving the way for this exciting future. Let us embrace the arrival of large-scale adoption of Web3 together.