Axelar Dips 13% as Circle Scoops Interop IP, Sidestepping Tokenholders

Circle Acquires Interop Labs IP for Axelar Network

Circle, the company behind the second-largest stablecoin USDC, has announced plans to acquire the team and intellectual property from Interop Labs, a key developer of the Axelar Network. The deal, expected to close in early 2026, excludes the Axelar Network, its foundation, and its AXL token, which will remain community-governed and independent.

The move is part of Circle's broader strategy to enhance its cross-chain infrastructure and expand the utility of USDC across multiple blockchain ecosystems according to recent reports.

Interop Labs, the original developer of the Axelar Network, has been instrumental in creating a decentralized interoperability framework that enables cross-chain messaging and asset transfers. Circle intends to integrate the team's technology into its Arc blockchain and Cross-Chain Transfer Protocol (CCTP), aiming to accelerate the development of its multichain infrastructure. The acquisition also marks Circle's latest effort to consolidate key engineering talent and proprietary technology in the crypto space.

Another entity, Common Prefix, will take over Interop Labs' prior responsibilities in maintaining and developing the open-source Axelar Network. This ensures continuity for the Axelar ecosystem while allowing Circle to leverage the expertise and IP it has acquired. Sergey Gorbunov, CEO and co-founder of Interop Labs, expressed optimism about the integration, stating that the move will help lay the groundwork for the next era of cross-chain finance.

How Markets Reacted

Axelar's native token, AXL, experienced a sharp decline of 13% following the announcement. The drop highlights a growing concern among token holders, who are not directly benefiting from the acquisition of Interop Labs' team and IP. While the deal validates the importance of Axelar's technology, it does not provide tokenholders with any financial upside, governance influence, or direct ownership stake in the acquired assets. Analysts note that this reflects a broader trend in crypto M&A, where value accrues to teams and infrastructure rather than tokens.

The market's reaction underscores a critical issue in the evolving crypto landscape: the disconnect between protocol adoption and token value. In this case, Circle's acquisition strengthens the underlying infrastructure for cross-chain interoperability but does not translate into immediate benefits for AXL holders. This has led to speculation about whether the broader crypto market will continue to reward token-based models or shift toward team- and technology-centric valuations.

What This Means for Investors

For investors and developers, the acquisition signals a strategic shift in how major crypto players are building infrastructure. Circle's focus on integrating key interoperability teams into its existing product suite—particularly the Arc blockchain and CCTP—suggests a long-term vision of a unified, scalable on-chain economy. This move positions USDC at the center of a growing trend toward multichain finance, where seamless asset transfers across blockchains are essential.

Developers using USDC can expect improved tools and enhanced cross-chain capabilities in the near term. By bringing in the engineering expertise from Interop Labs, Circle aims to reduce friction for users and developers who rely on USDC across multiple blockchains. The company also plans to expand its offerings to support more multichain applications and improve the developer experience. These efforts align with Circle's broader mission to build an "economic operating system for the internet" as stated in their official announcement.

Meanwhile, stablecoin issuers like Paxos and Tether have also been making strategic acquisitions in 2025 to expand their market share and infrastructure capabilities. This trend reflects a competitive environment where cross-chain interoperability is becoming a key differentiator. For investors, this suggests that companies with strong infrastructure and cross-chain capabilities will likely gain an edge in the evolving digital asset market.

Risks to the Outlook

Despite the potential benefits, the acquisition raises some concerns for the crypto community. One key issue is whether the integration of Interop Labs into Circle's operations will lead to increased centralization or reduced openness in the Axelar ecosystem. While Circle has emphasized that the Axelar Network and its open-source components will remain independent, some observers are watching closely to see how governance and development evolve. Maintaining the decentralized nature of Axelar will be critical to preserving trust and community engagement.

Another risk is the potential regulatory scrutiny surrounding Circle's growing influence in the crypto space as noted by industry analysts. The company has already been granted preliminary approvals to operate as a trust bank in the U.S., and its continued expansion into cross-chain infrastructure could attract attention from regulators. As the crypto industry moves closer to mainstream adoption, regulatory clarity and compliance will remain important factors in determining the long-term success of these initiatives.