What Is Axelar (AXL) Crypto

According to their own description, Axelar is a “permissionless Stripe for Web3.” Axelar seeks to facilitate the use of digital assets across numerous blockchains, much how the fintech business Stripe streamlines payment processing across multiple web platforms.

The proof-of-stake network’s safe operation depends on Axelar’s native coin, AXL, which is also used to pay network transaction fees and oversee governance choices. Based on market capitalization, the token is ranked in the top 150 cryptocurrencies worldwide.

History of AXL and its Native Coin

For developers as well as end users of decentralized apps (dApps), being able to create and communicate across numerous chains is important since interoperability is a fundamental obstacle to blockchain’s acceptance as a mainstream technology.

The platform primarily allows the following through Axelar’s decentralized network, connectivity via “gateway smart contracts,” and software development kit (SDK):

• Why dApp developers should build on the layer 1 blockchain of their choice and then link to external chains without paying extortionate gas fees or extra development expenses.
• dApp users can safely utilize their data and assets (such as cryptocurrency and NFTs) from one blockchain in any application on any other blockchain.

As co-founder Sergey Gorbunov put it, “Application developers need to be able to choose the best blockchain for their use case, without sacrificing access.” Without having to assume the additional risks connected with ad hoc bridges and inadequate security measures, users must be able to mix the resources and apps they want.

Two years after the project’s inception and following more than $US64 million in venture capital funding, Axelar’s mainnet went operational in 2022. The Cosmos Tendermint SDK served as its foundation.

The network’s native token, AXL, serves three main purposes:

• To reward and incentivize network validators who support consensus processes.
• To cover network usage fees and other charges incurred during user transactions.
• To grant the right to govern. The more AXL you own, the more influence you have over governance initiatives pertaining to protocol upgrades or operation.

In order to pay for their users’ transaction costs, apps and other services that use Axelar can purchase the AXL token, which improves client satisfaction.

In order to draw in validators and stakers, transaction fees and awards are offered; they are paid in AXL. This is how it operates:

• A proof-of-stake mechanism is used to safeguard cross-chain transactions, and data is validated across a varied, decentralized network of computer nodes (validators).
• Validators receive AXL tokens in exchange for their work in generating fresh data “blocks” and verifying transactions across several chains. Validators and stakers are also paid with AXL from transaction fees, often known as gas costs.
• In order to receive a share of the validator’s profits, less the validator’s commission, investors who own AXL assign their coins to the validator’s staking pool.

What is the scale going to be? According to the project, “Requiring every Axelar validator to run a node for every chain supported by the network becomes increasingly restrictive as Axelar expands and connects more and more chains.”

Rather, by offering higher staking incentives according to the number of supported chains, Axelar validators are encouraged to run nodes for as many of these chains as they can.

Pros and Cons of Investing in Axelar (AXL)

Leading dApp projects and enterprise partners have shown interest in Axelar, including Microsoft, JP Morgan’s real-world asset tokenization platform, Onyx, Uniswap, Metamask, Ondo Finance, the largest liquid staking platform, Lido, Web3 gaming platform, Immutable, and the issuer of USDC stablecoin, Circle. At the moment, the network can link over 60 distinct blockchains.

The expansion of blockchain apps that are connected with Axelar and the possibility of future deflation in token supply are both positive signs for the rising value of the coin.

But investor sentiment and market timing frequently have more influence on whether you can earn a profit from crypto than a project’s core quality and usefulness. Axelar is currently selling at 73% below its all-time high hit in March 2024, and investors who purchased in at that figure have little certainty of making their money back.

An increased level of optimism over cryptocurrencies and the news of significant collaborations or upcoming projects on Axelar may pique interest in the AXL coin, but keep in mind that this is a high-stakes game.

Disclaimer: A high-risk asset class is cryptocurrency. This article is not financial advice; rather, it is provided for informational reasons only. Your entire investment could be lost.