Axelar operates a decentralized overlay network built on Cosmos technology that connects more than 80 independent blockchains, including Ethereum, Solana, Sui, and Aptos, through a unified gateway architecture. The protocol addresses the infrastructure requirement for moving assets between blockchains with separate transaction histories and token standards. In February 2025, Axelar introduced the Cobalt upgrade, which permanently burns 98% of cross-chain transaction fees paid in AXL tokens. In December 2025, Circle signed an agreement to acquire Interop Labs, the core development company behind Axelar, covering the team and intellectual property but excluding the Axelar Network, the Axelar Foundation, and the AXL token. The blockchain interoperability market is projected to reach $2.55 billion by 2029, according to the source article.
Axelar Implements Five-Step General Message Passing Protocol
General Message Passing is Axelar's core protocol for enabling cross-chain function calls. A smart contract on the source chain invokes a callContract function on the local gateway. That call specifies the destination chain, the target contract address, and the transaction payload.
The message moves through five sequential components before reaching the destination chain. The source application emits a gateway event, and Axelar validators observe the transaction on-chain. Validators reach consensus through a threshold requiring approximately 67% agreement on the message validity. After consensus, validators produce a multisig attestation that confirms the message is verified and authentic. A relayer then submits the verified call to the destination chain's gateway for final execution.
Sergey Gorbunov, Axelar co-founder, described the mission as delivering "secure cross-chain communication for Web3," according to Disruption Banking. He stated that users should "interact with any asset or application, on any chain, with one click." The Squid Router, built on General Message Passing, has settled over $4 billion in cumulative cross-chain volume.
Axelar Validator Network Uses Quadratic Voting and On-Chain Slashing
Axelar is a Tendermint-based proof-of-stake blockchain with roughly 70 active validators. Each validator runs the Axelar chain consensus engine alongside external nodes for every supported chain. This architecture means validators independently verify transactions on both the source and destination blockchains.
The network uses quadratic voting, where vote weight equals the square root of staked AXL tokens. This mechanism reduces the concentration of influence that large token holders would otherwise accumulate.
Axelar distinguishes itself from competing protocols through on-chain slashing of misbehaving validators, according to its technical documentation. Protocols like Wormhole use guardians that sign messages but do not produce blocks or face slashing. Axelar has not experienced a verification layer exploit since its mainnet launch in 2022.
Gateway contracts deployed on every connected chain serve as entry and exit points for all cross-chain messages. The Axelar Gas Service abstracts destination chain gas fees, letting users prepay in any source chain token.
The February 2025 Cobalt upgrade added a deflationary mechanism to the AXL token's economic model permanently. Under this upgrade, 98% of all cross-chain transaction fees paid in AXL are burned, according to CryptoSlate. The remaining 2% funds community proposal grants approved through the network's governance process.
JPMorgan and Deutsche Bank Adopt Axelar for Tokenized Asset Platforms
JPMorgan's Onyx Digital Assets division piloted cross-chain tokenized fund transfers using Axelar in late 2023. Deutsche Bank adopted Axelar for its DAMA 2 tokenized asset platform deployed on an Ethereum Layer 2 chain.
Lido selected a joint Axelar and Wormhole bridge design as the canonical bridge for wstETH to BNB Chain, enabling interaction with approximately $23 billion in locked value while avoiding dependence on a single interoperability provider.
Circle's USDC stablecoin flows natively through Axelar gateways without requiring wrapped token versions on each chain. In December 2025, Circle signed an agreement to acquire Interop Labs, the core development company behind Axelar. The agreement covered the team and intellectual property but excluded the Axelar Network, the Axelar Foundation, and the AXL token, allowing the protocol to remain independently governed while Common Prefix assumed a larger development role.
In 2025, Axelar announced partnerships with TON Foundation, Sui, XION, Elys Blockchain, and Ubyx, according to Disruption Banking. The Sui mainnet integration was completed in May 2025, adding another high-throughput chain to the network.
Ripple's XRPL EVM Sidechain launched with Axelar interoperability live from day one, enabling cross-chain transfers between XRPL, the XRPL EVM Sidechain, and supported blockchain networks through the Axelar ecosystem.
The Interchain Token Service launched its ITS Hub in 2024 for centralized cross-chain token management. Developers can deploy tokens across all connected chains through mint and burn, lock and unlock, or wrapping modes.
U.S. Regulators Have Not Classified Cross-Chain Interoperability Protocols
Cross-chain interoperability protocols currently operate without specific regulatory classification in the United States. The March 2026 SEC and CFTC joint guidance on crypto asset classification did not address infrastructure layer protocols directly.
FAQ
What is Axelar's General Message Passing protocol?
General Message Passing is Axelar's core protocol that enables smart contracts on one blockchain to call functions on another blockchain. A smart contract on the source chain invokes a callContract function on the local gateway, specifying the destination chain, target contract address, and transaction payload. The message moves through five sequential components: the source application emits a gateway event, Axelar validators observe the transaction on-chain and reach consensus through a threshold requiring approximately 67% agreement, validators produce a multisig attestation confirming message validity, and a relayer submits the verified call to the destination chain's gateway for final execution.
How does Axelar's quadratic voting mechanism work?
Axelar's network uses quadratic voting, where vote weight equals the square root of staked AXL tokens. This mechanism reduces the concentration of influence that large token holders would otherwise accumulate and encourages broader validator participation across the network's roughly 70 active validators.
Which financial institutions have adopted Axelar infrastructure?
JPMorgan's Onyx Digital Assets division piloted cross-chain tokenized fund transfers using Axelar in late 2023. Deutsche Bank adopted Axelar for its DAMA 2 tokenized asset platform deployed on an Ethereum Layer 2 chain. In December 2025, Circle signed an agreement to acquire Interop Labs, the core development company behind Axelar, covering the team and intellectual property but excluding the Axelar Network, the Axelar Foundation, and the AXL token.
