What is Axelar Network: The Stripe of Web3 – Asia Crypto Today

In the rapidly evolving blockchain landscape, interoperability has emerged as a crucial puzzle piece, with giants such as Polkadot, Cosmos, and Chainlink paving the way toward a seamless cross-chain future. Amidst these titans, Axelar Network emerges with a unique proposition, carving out its own niche in the quest for blockchain interoperability. Unlike its predecessors, Axelar focuses on simplifying cross-chain communication with a developer-friendly approach, offering a robust suite of tools and protocols designed to bridge the divide between disparate blockchain networks.

With its innovative RollApp concept, Axelar not only promises enhanced scalability and efficiency but also a more accessible and cohesive Web3 landscape. This positions Axelar as a formidable contender in the interoperability arena, equipped with distinctive features that address the nuances of cross-chain integration in ways that could redefine the standards for blockchain interoperability.

Background

The inception of Axelar Network stems from a clear vision to dismantle the existing barriers hindering cross-chain communication within the blockchain realm. Co-founders Sergey Gorbunov and Georgios Vlachos, both deeply entrenched in blockchain research and technology, established the network under the aegis of the Axelar Foundation. Sergey Gorbunov, before embarking on the Axelar journey, held a position as an Assistant Professor at the University of Waterloo, focusing on Cryptography, Security, and Privacy. His prior ventures include co-founding Skalex, a cryptocurrency exchange software provider, and Algorand, which strives to facilitate broader blockchain adoption by overcoming existing hurdles.

Georgios Vlachos, complementing Gorbunov’s expertise, entered Axelar with a rich background as a Research Scientist at Algorand, where he played a pivotal role in crafting the next wave of public, permissionless blockchains.

Rooted in the founders’ profound understanding and ambition, Axelar was designed as a network to enable seamless, secure, and scalable cross-chain communication. Recognizing the siloed nature and intrinsic limitations of existing blockchains, the aim was to forge a network that would allow decentralized applications (dApps) to effortlessly interact across various blockchain ecosystems. The founders envisioned a world where developers could easily bridge different chains, fostering a more unified and accessible Web3 landscape. This foundational principle continues to underpin Axelar’s evolution and mission to streamline cross-chain interoperability.

What is Axelar?

The Axelar Network stands as a pioneering Web3 communication platform designed to facilitate seamless interoperability among diverse blockchains. This groundbreaking network empowers users of decentralized applications (dApps) to effortlessly engage with a myriad of assets and applications across different blockchain environments. At the heart of Axelar’s robust infrastructure is a proof-of-stake consensus mechanism, which is complemented by advanced functionalities such as general message passing and a Turing-complete virtual machine.

These features collectively enable the execution of complex interchain operations, thereby bridging the once-imposing divide between various blockchain ecosystems. Through its innovative approach, Axelar is setting a new standard for how dApps communicate and interact, making the Web3 space more integrated and accessible for users and developers alike.

How Does It Work?

Axelar operates through a meticulously designed tech stack composed of three distinct layers, each contributing to its cross-chain communication capabilities. At its foundation lies a proof-of-stake (PoS) blockchain. This blockchain leverages permissionless protocols and the principles of PoS to efficiently handle requests for cross-chain interactions. Positioned above this foundational layer is a sophisticated cross-chain gateway protocol. Through this protocol, validators engage in monitoring and facilitating cross-chain communications, utilizing smart contracts to ensure accurate and secure transactions. This gateway protocol is fortified with mechanisms such as consensus, multi-party computation, and voting, which collectively authenticate on-chain events.

The intermediary layer comprises gateways formed by smart contracts. These contracts are the mediums through which validators interact to carry out the execution of cross-chain transactions. Above these two foundational layers is the third and topmost layer, designed for developers: the API and SDK layer. This layer provides developers with the tools necessary to effortlessly create decentralized applications (DApps) that operate across different blockchain ecosystems.

The integration of a blockchain within the Axelar network unlocks its potential for limitless interoperability. This means that applications can seamlessly connect with and operate across major blockchains such as Ethereum, Avalanche, and Cosmos, among others. Through this innovative structure, Axelar not only simplifies the process of cross-chain communication but also significantly expands the operational scope and capabilities of DApps in the broader blockchain landscape.

How Axelar Innovates Blockchain Interoperability

In the digital age, interoperability is a crucial yet often overlooked aspect of the internet that enables seamless global interactions, such as international video calls. As we venture into the era of web3, we find ourselves at a juncture reminiscent of the early days of the internet in the 1980s, marked by a proliferation of innovative applications across disparate networks, each isolated and hindered by a lack of interconnectivity, thus unable to realize its full global market potential.

Understanding Axelar’s transformative role requires a deep dive into the evolving narrative of cross-chain functionality and its critical significance for the web3 ecosystem.

The Necessity for Diverse Blockchains: The blockchain ecosystem thrives on the coexistence of multiple Layer 1 and Layer 2 blockchains. This diversity is crucial because no single blockchain can scale adequately to meet the demands of today’s high-demand real-world applications. Therefore, horizontal expansion is imperative for scalability.

Embracing Cross-Chain Transactions: Today’s web3 user journey often involves actions such as purchasing meme coins on decentralized exchanges (DEXs), trading NFTs, or participating in DeFi platforms. These activities usually entail multiple transactions across various applications and chains, with an estimated one in every four transactions being cross-chain. This highlights the need for a robust interoperability infrastructure to support these transactions seamlessly.

Axelar’s Pivotal Role in Interoperability: Axelar stands at the forefront of the interoperability space, outperforming its competitors with a significant margin in terms of integrations with blue-chip DeFi projects. With its comprehensive approach to interoperability, Axelar facilitates integration with a wide range of decentralized applications (DApps), leading the way in:

• DeFi: Establishing partnerships with leading platforms such as dYdX, Frax®, Lido, PancakeSwap, and Uniswap.
• Wallets: Integrating with major wallet providers including Blockchain.com, Ledger, MetaMask, and Trust Wallet.
• Real-World Assets (RWAs): Collaborating with Circle, Ondo Finance, Centrifuge, and Apollo Global Management to bridge the gap between digital and physical assets.
• Enterprise Sector: Working alongside corporate giants such as J.P. Morgan, Mastercard, and Microsoft to bring blockchain solutions to the enterprise level.

AXL Token

The AXL token stands at the core of the Axelar network, serving as its native utility token to facilitate secure cross-chain communication. Ownership of AXL tokens empowers holders with the capacity to partake in decentralized security and governance, besides accruing rewards and fees. The Axelar network is fortified by a battle-tested proof-of-stake (PoS) mechanism, which is further enhanced with layers of security and programmability, all powered by the AXL token.

As a PoS network, validators play a pivotal role in ensuring the security of the network and, in return, receive rewards for their contributions. Governance decisions, such as setting the base inflation rate, chain rewards, transfer rate limits, and incorporating new EVM chains, fall under the purview of AXL token holders. This governance mechanism ensures that the network remains adaptive and responsive to the needs of its users and the evolving blockchain landscape.

The reward system introduces an inflationary model to the total supply of AXL tokens. This model is strategically designed to bolster the network’s security, stability, and decentralization, ultimately contributing to the sustained growth and development of the network.

For wider compatibility across the blockchain ecosystem, AXL has an ERC-20 variant known as wAXL, making it functional on all EVM-compatible chains. However, it is important to note that wAXL cannot directly be used to provide liquidity in exchange for rewards. Instead, it must be converted back to the native AXL form to participate in liquidity provision activities.

Conclusion

As we delve deeper into the era of blockchain technology, the quest for seamless interoperability continues to gain momentum. While established players have laid down the foundational frameworks for cross-chain communication, Axelar stands out with its unique approach to tackling the challenges of interoperability. Through its innovative RollApp framework, comprehensive developer tools, and a strong emphasis on security and decentralization, Axelar presents a compelling solution that could very well shape the future of how blockchains interact.

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