Axelar's Future Post-Circle Acquisition and AXL's Value Reassessment: Interoperability's Resilience and Token Utility in Decentralized Ecosystems

The acquisition of Interop Labs by Circle in December 2025 marks a pivotal moment for Axelar and the broader blockchain interoperability landscape. While critics have raised concerns about the implications for AXL token holders, a deeper analysis reveals that the move could catalyze long-term value creation for the network. By examining the strategic rationale, token utility dynamics, and comparative strengths against competitors like Polkadot and Cosmos, this article argues that Axelar's post-acquisition trajectory is underpinned by robust technical innovation and institutional adoption, positioning AXL for a nuanced reassessment of its value.

Strategic Rationale: Circle's Move and Axelar's Cross-Chain Vision

Circle's acquisition of Interop Labs-a core contributor to the Axelar Network-was framed as a strategic step to accelerate cross-chain infrastructure for its Arc and Circle Cross-Chain Transfer Protocol (CCTP) initiatives. By integrating the team and proprietary intellectual property, Circle aims to enhance USDC's interoperability across multiple blockchains, reducing friction for developers and users. This aligns with broader industry trends, as blockchain interoperability becomes a critical enabler for real-world asset (RWA) tokenization and enterprise adoption.

However, the acquisition has sparked debate over AXL token holders' role. Critics argue that the move resembles a "rug pull," as token utility remains unchanged while the team and IP are absorbed by Circle. Supporters counter that tokens inherently occupy a lower capital hierarchy than equity, and the open-source nature of Axelar's codebase ensures continuity under community governance. This duality underscores a broader tension in decentralized ecosystems: how to balance centralized strategic partnerships with decentralized governance models.

AXL Tokenomics: Deflationary Mechanisms and Institutional Demand

Axelar's token utility has evolved significantly post-2023, particularly with the Cobalt upgrade in February 2025. This upgrade introduced a gas fee burning mechanism, where 98% of network transaction fees are burned, while 2% funds community proposals and reward pools. This deflationary model, combined with increased blockchain connectivity (e.g., Solana, XRP Ledger, TON), has created upward pressure on AXL demand.

Institutional adoption further bolsters AXL's utility. For instance, Axelar's collaboration with Deutsche Bank under Singapore's Project Guardian highlights its role in institutional-grade cross-chain solutions. Additionally, the Mobius Development Stack (MDS), launched in Q3 2024, provides developers with tools to deploy cross-chain applications seamlessly, expanding the network's scalability and use cases. These developments suggest that AXL's value is increasingly tied to its role in facilitating institutional and developer activity, rather than speculative demand alone.

Comparative Analysis: Axelar vs. Polkadot and Cosmos

Axelar's approach to interoperability diverges from competitors like Polkadot and Cosmos. While Polkadot relies on a shared security model via its Relay Chain and Cosmos emphasizes sovereign zones connected by IBC, Axelar's consensus-agnostic design allows it to bridge diverse blockchains, including EVM and non-EVM chains. This flexibility has enabled partnerships with projects like Midas and Lista DAO to launch mXRP, a yield-bearing liquid staked token for XRP, expanding cross-chain liquidity for institutional investors.

Polkadot's XCM protocol and Cosmos' IBC remain technically robust but face challenges in external chain integration. For example, Cosmos struggles to bridge assets to Ethereum or Solana, while Polkadot's XCMP protocol is still maturing. In contrast, Axelar's Generalized Message Passing (GMP) system allows for cross-chain transmission of arbitrary data and function calls, enabling complex use cases like governance and liquidity composition. This technical edge positions Axelar as a more versatile solution for developers seeking broad interoperability.

AXL's Value Reassessment: Risks and Opportunities

Despite these strengths, AXL faces headwinds. In Q2 2024, its price declined by 69% quarter-over-quarter, partly due to a 15% increase in circulating supply and broader market conditions. However, revenue grew by 408% year-over-year, indicating strong network activity. The token's future value will depend on three key factors:
1. Institutional Adoption: Partnerships with banks and RWA platforms could drive demand for AXL as a governance and utility token.
2. Regulatory Clarity: Evolving frameworks like the EU's MiCA and U.S. SEC guidance will shape token utility and investor confidence.
3. Competition: Polkadot and Cosmos may close the gap with improved XCMP and IBC implementations, though Axelar's deflationary model and institutional focus provide a buffer.

Conclusion: A Nuanced Outlook for AXL

Axelar's post-acquisition trajectory reflects the resilience of interoperability protocols in decentralized ecosystems. While the acquisition initially raised concerns about token holder value, the Cobalt upgrade, institutional partnerships, and technical differentiation have reinforced AXL's utility. Investors should view AXL through a dual lens: as a deflationary asset with growing institutional demand and as a key player in the cross-chain infrastructure race. As blockchain interoperability becomes a cornerstone of enterprise adoption, Axelar's strategic alignment with Circle and its technical innovations position AXL for a reassessment of its value-not as a speculative token, but as a foundational component of a multi-chain future.