Binance launched #AXL today. This coin may be unfamiliar to many people. Let’s take a look at what it is:
Axelar is a POS blockchain built with Cosmos SDK, which enables cross-chain interoperability between various crypto ecosystems, i.e. a crypto full coverage network. Axelar has a set of Gateway smart contracts that connect the Axelar network and its interconnected external chains, as well as a software development kit (SDK) containing developer tools and APIs. 
Core functions and technical implementation
The validator monitors the transaction requests issued on the source chain through the gateway deployed on each chain, verifies the legitimacy of the transaction on the Axelar chain, and then passes it to the target chain to complete the transaction.
Gateway
Gateways are smart contracts that provide connectivity between the Axelar network and its interconnected Layer1. Validators on Axelar monitor the gateway for incoming transactions and read those transactions. They then reach a consensus on the validity of that transaction, and once they agree, they write to the target chain's gateway to execute the cross-chain transaction. Simply put, gateways enable communication between Axelar and its connected chains, and they have two main functions. On the source chain where the information comes from, the gateway can initiate a cross-chain information request. On the destination chain where the information is received, the gateway enables the information to be executed and completes the cross-chain protocol.
Analysis of cross-chain transfer principle
For cross-chain protocols, security is the most core requirement. Axelar mainly uses three mechanisms to ensure the security of the system:
1. Proof of Stake (PoS) consensus secured by $AXL, which is a mechanism for external validators to reach consensus on cross-chain transactions. The security of Axelar cross-chain essentially depends on the security of Axelar public chain under PoS consensus. It relies on a dynamic and permissionless validator set, which is more secure than external verification bridges that rely on PoA or multi-signature.
2. Quadratic Voting, further improving the decentralized nature of the consensus mechanism. Quadratic voting, i.e., voting cost = number of votes^2, is used to mitigate the threat of oligopoly to network security and prevent the monopoly party that accumulates the majority of tokens from reviewing transactions. Axelar implemented quadratic voting in the Maeve upgrade at the end of August 2022 to verify and process cross-chain transactions.
3. Other security measures besides the consensus mechanism mainly include rate limiting and network key rotation. The Axelar gateway has a rate limiting function that limits the amount of each asset that can be transferred in a given time interval. In addition, validators are encouraged to rotate keys every two months to protect the network from persistent attackers. In addition, the Axelar network and contracts are 100% open source, and the bug bounty program will incentivize the inspection and submission of possible vulnerabilities.
Token Economy - Fixed inflation and non-fixed deflation; AXL has three main uses:
1. Rewards: Token holders can stake AXL and delegate AXL to the validator’s staking pool to receive rewards. Network validators generate blocks by staking AXL and verify and vote on messages to receive commissions.
2. Fees: used to pay for cross-chain fees for using the Axelar network.
3. Governance: Allow token holders to participate in the governance of proposals such as parameter changes or protocol upgrades.
AXL tokens will be issued in September 2022 with an initial supply of 1B and no maximum supply. The token distribution and unlocking schedule is as follows. The current circulating supply is 535,564,229, the total supply is 1,128,220,669 (according to Coingecko data), the staked amount is 761M (according to Axelarscan data), and the token inflation rate is 6.1%.
Team and financing
Both founders of the team are from the Algorand founding team and have strong academic background and blockchain development experience.
- In November 2020, it received a $3.8 million angel round of financing, with Coinbase Ventures among the investors;
- In July 2021, it received US$25 million in Series A funding from investors including Polychain, Dragonfly Capital Partners, Galaxy Digital, etc.
- In February 2023, it announced the completion of a US$35 million financing round with a valuation of US$1 billion. Investors included Dragonfly Capital Partners, Polychain, North Island Ventures, Rockaway Blockchain Fund, Cygni Capital, Lemniscap, Olive Tree Capital, Blockchange Ventures, Node Capital, and angel investors included Waikit Lau and Gokul Rajaram.
