Research Summary
The report provides an in-depth analysis of the Axelar network’s performance in 2023, highlighting its growth, key metrics, and future plans. It discusses the network’s expansion, the increase in connected chains, and the introduction of new technologies like the Axelar Virtual Machine and Interchain Token Service.
Key Takeaways
Impressive Growth of Axelar Network
- Expansion of Connected Chains: The number of chains connected to the Axelar network increased from 30 to 55 in 2023. This growth was facilitated by services like the Squid liquidity router, which is often the most active contract by interchain transactions and volume.
- Price and Market Cap Increase: AXL, the network’s token, saw a 131% YoY price increase. The circulating market cap of AXL also grew by 344% QoQ to $621 million, outpacing the overall crypto market’s growth of 54%.
- Interchain Transactions and Active Addresses: Interchain transactions and active addresses on the Axelar network increased by 478% and 430% YoY, respectively, indicating a significant increase in network activity.
Introduction of New Technologies
- Axelar Virtual Machine (AVM): The AVM is being developed to expand the Axelar network’s capabilities from bridging and message passing to a fully programmable cross-chain layer. This will allow developers to deploy smart contracts on Axelar and build natively cross-chain logic and developer tooling.
- Interchain Token Service (ITS): The ITS is designed to preserve the fungibility and custom functionality of native tokens across multiple networks. These preserved tokens are known as Interchain Tokens.
Future Plans and Developments
- Interchain Amplifier: The Interchain Amplifier will enable developers to permissionlessly connect new blockchains to the Axelar network, potentially making Axelar a solution for hundreds of Ethereum L2s (and L3s).
- Gas-Burning Mechanism: A proposal is in place to introduce a gas-burning mechanism similar to EIP-1559, which would burn fees rather than pay them to validators and stakers.
Actionable Insights
- Monitor the Development of New Technologies: The introduction of the Axelar Virtual Machine and Interchain Token Service could significantly expand the Axelar network’s capabilities. Stakeholders should keep an eye on the development and implementation of these technologies.
- Assess the Impact of the Interchain Amplifier: The Interchain Amplifier’s ability to allow developers to connect new blockchains to the Axelar network could greatly increase the network’s reach and utility. Its impact on the network’s growth should be closely monitored.
- Consider the Implications of the Proposed Gas-Burning Mechanism: The proposed gas-burning mechanism could have significant implications for the Axelar network’s economic structure. Stakeholders should consider its potential impact on network fees and the value of AXL.
