The Pipeline Knowledge Graph

Interchain token services and future use cases

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From: thepipeline_xyz

Axelar’s Interchain Token Service (ITS)

Axelar offers an Interchain Token Service (ITS), currently in beta, which aims to be a code-free and permissionless solution for tokenization and bridging [00:18:30], [00:18:40], [00:18:43]. This service allows individuals, even those without coding knowledge, to launch tokens or meme coins and enable them for cross-chain functionality [00:18:52], [00:19:09].

Key features and benefits of ITS include:

  • Multi-chain launch from day one Developers can launch a token on multiple chains instantly, with the ability to scale to any future chain supported by Axelar [00:19:11], [00:19:14].
  • Reduced fragmentation By building all logic on one chain (e.g., Monad) and using Axelar for connectivity, applications can avoid fragmentation, consolidate users, and simplify development [00:12:17], [00:12:20], [00:12:26].
  • Permissionless and Decentralized ITS aligns with crypto’s ethos, allowing anyone to take their token cross-chain in minutes without requiring developer expertise or permission [00:20:47], [00:20:54], [00:20:58]. This power of decentralization and permissionless access has already led to successful meme coin launches [00:21:12], [00:21:14].

As an example, Frax has partnered with Axelar to issue Frax assets on chains not supported by their native Frax Ferry bridge, and on all future chains [00:19:39], [00:19:47]. This demonstrates a shift where projects recognize the rapid evolution of cross-chain environments and rely on specialized platforms like Axelar for asset issuance [00:19:52], [00:20:01].

The field of cross-chain communication is still early, with current use cases heavily focused on asset transfers [00:13:22], [00:13:26], [00:13:30]. However, there’s a strong expectation for exponential growth in cross-chain transactions and message passing as the number of chains rapidly increases [00:14:27], [00:14:29].

“I think then what we see today on a single chain, there will be a cross-chain version of that… and on top of that, there’ll be like new unique use cases that we haven’t really even thought of yet” [00:14:50], [00:15:03].

Specific future use cases are expected to mirror existing single-chain applications but with cross-chain capabilities, such as:

Evolution of Builder and User Perspective

The perspective of builders and users regarding cross-chain functionality has evolved significantly. A year ago, teams were content building on a single chain, but now the immediate conversation revolves around launching on multiple chains (two or three) with plans for more [00:15:52], [00:16:01]. This shift is due to the rapid movement of liquidity and users across various chains [00:16:23], [00:16:25], making it necessary to plan for a cross-chain world [00:16:32].

Enabling Factors for Growth

Two primary factors are seen as critical for the expansion of cross-chain use cases:

  1. Lower Gas Fees Cross-chain gas fees are currently high, encompassing costs on the source chain, destination chain, and relay [00:13:44], [00:13:50]. As scaling solutions reduce these costs, cross-chain transactions will become cheaper and more accessible, leading to increased volume [00:14:04], [00:14:09].
  2. Instant Finality Chains with instant finality, such as Monad, are crucial for building efficient cross-chain applications [00:16:57], [00:16:59]. Current delays (15-20 minutes for Ethereum, longer for L2s due to block verification) hinder user experience [00:17:02], [00:17:11]. With instant finality, messages can pass much faster (60-90 seconds), significantly improving the user experience [00:17:28], [00:17:31], [00:17:34].

Interoperability as an Embedded Layer

Rather than being a “killer use case” itself, interoperability is viewed as a fundamental layer that will make Web3 as usable as Web2 [00:31:10], [00:31:12], [00:31:15]. It will be integrated into virtually every application across DeFi, gaming, real-world asset tokenization, and NFTs [00:31:23], [00:31:25], [00:31:27], [00:31:30].

The goal is to abstract away the complexities of different blockchains from the user [00:31:38]. For example, if an asset is on Solana and an application on Arbitrum, the user ideally shouldn’t need to know [00:31:44], [00:31:45], [00:31:48]. The wallet should handle asset location and present a unified balance, using interoperability infrastructure to seamlessly pass messages across networks [00:31:50], [00:31:53], [00:31:57], [00:32:02].

Axelar’s architecture, particularly the Axelar Virtual Machine, is seen as uniquely positioned to support this future where interoperability is ubiquitous [00:33:04], [00:33:06], [00:33:11], [00:33:16].

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