A quick overview of the cross-chain bridge Axelar: mechanism design, token functions and ecosystem development

Source: Emperor Osmo tweets

Compilation: Deep Tide TechFlow

Over the past six months, there is one chain that has been critical to the growth of Cosmos, and that is Axelar, which powers the cross-chain future.

Now that Axelar has made good progress, let’s take a look.

**Axelar is an appchain designed to connect all blockchains for true interoperability. **

Their objectives are:

• Become a plug-and-play communication solution;
• Provide cross-chain operability;
• Allow users to interact in multiple ecosystems;

And, Axelar is guaranteed by a total of 50 validators, which are divided into 3 roles according to different functions:

• Maintain the network;
• To process transactions;
• Run the cross-chain gateway protocol

The cross-chain gateway protocol is a multi-party cryptography overlay that sits on top of the connected chain, and it is responsible for reading and writing operations between smart contracts to verify transactions.

**Gateway Protocol: Axelar is operated by gateways that provide connectivity between networks and chains. **

• Validators read transactions;
• Write down the destination;
• Execution of transactions;

Developer Tools: They are located on validator nodes and enable developers to access the Axelar network. At the same time, this will also allow for interoperability between the blockchain and subsequent applications. **

$AXL tokens play an interesting role in the task of connecting Web3.

It serves three main purposes:

*Safe; *Govern; *Expenses;

At genesis, a total of 10 AXL tokens were minted and issued and distributed in the following ways:

• Community program 35.96%;
• Community sales 5%;
• Supporters: 29.54%;
• Core team 17%;
• Corporate operations 12.5%;

$AXL Tokens will be locked at genesis, but will be able to perform staking:

• All tokens are staked and earn 15% APY;
• Tokens for company operations and community projects to be released within four years;

Currently, $AXL tokens are not required for transactions on the network, which means that fees paid in other tokens will be converted to:

• Convert to $AXL to pay stakers and validators;
• Gas fees to travel to the destination chain;

For the excess $AXL per fee, there will be a mechanism to make $AXL deflationary.

The excess liquidity of each payment that occurs on Axelar can be used by:

• Return to the user;
• Used to buy back AXL tokens;
• Burn AXL tokens;

If implemented, this creates a virtuous cycle: the trading volume ➡ of fees ➡ and the excess portion ➡ $AXL the value of the token.

So, how successful has Axelar been since its launch this year?

• IBC ranked 2nd in terms of trading volume;
• $204 million transferred over 30 days;
• Average monthly users are 7274;
• $127 million in TVL;

At the same time, Axelar has been the largest USDC liquidity provider in Cosmos.

Of its $127 million TVL, 53% comes from USDC trading volume.

Since January 2021, thanks to the existence of Axelar, more than $300 million in USDC transactions have been completed in the Cosmos ecosystem.

It is one of the biggest drivers of the growth of liquidity in the Cosmos ecosystem.

What is the situation inside the ecosystem?

Here’s how much IBC was traded with Axelar over a 30-day period:

• Osmosis：39.9%；
• Kujira：79.8%；
• JunoNetwork：22.6%；
• Crescent：57.4%；

Axelar is positioned as a neutral communication layer that enables commercialization on Web3, scaling security and interoperability through the Tendermint consensus, where each node guarantees the security of the network while avoiding the risks and clunky cross-chain bridge designs.

Their story has only just begun.