From: thepipeline_xyz
Axelar is an interoperability network structured as a blockchain that connects 56 blockchains and counting [00:03:28]. It is not a bridge in the traditional sense, but rather a messaging platform upon which various cross-chain applications can be built [00:04:30]. These applications include cross-chain decentralized exchanges (DEXes), money markets, and NFT marketplaces [00:04:40].
Challenges with Centralized Bridges
Historically, centralized bridges like Ren Protocol and Multi-chain (which recently lost all its funds) were prone to security vulnerabilities [00:03:47]. These bridges often relied on a single founder or centralized entity holding all funds in a key [00:04:02]. When this key was compromised, as seen in major DeFi hacks like Harmony, Ronin, and Multi-chain, all funds were lost due to centralization [00:04:14].
Axelar’s Differentiators
Axelar was designed to address the issues of centralization and scalability found in earlier interoperability solutions [00:04:26]. Its key differentiators include:
1. Architecture: Many-to-Many Connectivity
Unlike competitors such as Wormhole, Chainlink CCIP, and LayerZero, which typically offer only pairwise connectivity, Axelar leverages its blockchain architecture to provide many-to-many connectivity [00:05:01]. A single connection to the Axelar blockchain allows routing messages to any other connected blockchain, simplifying the process of adding new chains and ensuring broader reach [00:05:19].
2. Decentralized Security
Axelar is built on the Cosmos SDK, featuring a fully decentralized validator set [00:06:05]. With 75 validators (compared to Wormhole’s 19), an attack on the network requires corrupting a majority of these validators [00:06:18]. This design makes Axelar almost as secure as the chains it connects to, enhancing overall cross-chain security [00:06:36].
Origins and Inspiration
The inspiration for Axelar stemmed from the challenges faced in onboarding users and developers to new blockchains like Algorand, where one of Axelar’s founders, Georgios, was part of the founding team [00:07:51]. At the time, liquidity was concentrated on Ethereum, and bridging to other chains was difficult [00:08:10]. It became clear that bridging needed to evolve beyond simple asset transfers to focus on improving user experience and abstracting away the complexities of Web3 [00:08:35]. This led to the development of a more generalizable message-passing platform [00:08:48].
General Message Passing (GMP) for Developers
The General Message Passing (GMP) protocol allows developers to build applications with their core logic on a fast EVM chain, like Monad, while enabling users from other networks to easily interact with them [00:10:09].
For example, a developer building a perp DEX on Monad can allow users from Arbitrum or Solana to open positions directly [00:10:32]. This is achieved by deploying a small piece of code on the origin chain (e.g., Arbitrum), which connects to Axelar’s endpoint on that chain [00:10:43]. A message, such as “deposit X amount of USDC and open a position,” is passed from the origin chain to the application on Monad, eliminating the need for a separate bridging step for the user [00:11:09]. This approach centralizes application logic on one chain, reducing fragmentation and simplifying development [00:12:09].
Current and Future Use Cases of Cross-Chain Interoperability
Currently, many cross-chain use cases are still focused on asset transfers, such as bridging and cross-chain swaps [00:13:26]. However, as scaling solutions and high-throughput blockchains like Monad reduce gas costs, cross-chain transactions are expected to become more accessible and numerous [00:14:05].
The growth of new chains (rollups, app chains, Cosmos chains) daily suggests that cross-chain activity will scale exponentially [00:14:31]. In the future, every application seen on a single chain today is likely to have a cross-chain version, along with entirely new use cases yet to be imagined [00:14:58].
One significant shift is that projects are now planning to launch on multiple chains from day one, recognizing the decentralized nature of liquidity and users across the ecosystem [00:16:05]. The user experience is crucial, and rapid transaction finality, such as Monad’s instant finality, significantly improves cross-chain message passing times, reducing wait times from 15-20 minutes to 60-90 seconds [00:17:11].
Interchain Token Service
Axelar’s Interchain Token Service (ITS), currently in beta, aims to simplify tokenization and bridging [00:18:28]. It provides a code-free, permissionless solution for launching and bridging tokens across multiple chains [00:18:40]. This service allows projects to issue tokens with cross-chain functionality from day one, leveraging Axelar’s support for various chains [00:19:14]. For example, Frax now uses Axelar to issue Frax assets on chains not supported by its native Frax Ferry bridge, realizing that focusing on core products rather than managing bridging is more efficient [00:19:39].
The goal of interoperability is to make Web3 as user-friendly as Web2 by abstracting away the underlying blockchain complexities [00:31:15]. Users should ideally not need to know if their asset is on Solana and the application on Arbitrum; the wallet should manage this seamlessly, presenting a unified balance and using interoperability infrastructure to handle cross-network communication [00:31:40].
Mitigating Interoperability Risks
The security of assets, whether native or wrapped, depends entirely on the underlying bridging infrastructure [00:22:26]. Key mechanisms employed by Axelar to mitigate risks include:
- Decentralization: As mentioned, Axelar’s decentralized validator set eliminates the most common attack vector seen in centralized bridges [00:23:16].
- Rate Limiting: A simple code-based check can be added to transactions to minimize the impact of a hack [00:23:46]. Axelar’s many-to-many architecture allows for customizable rate limits on its own blockchain, helping to contain damage even if a connected chain experiences a breach [00:24:06]. Rate limits can be hourly or over longer periods, and can be dynamically refreshed [00:26:57].
- Multi-Provider Approval: For the highest level of security, applications can require approval from multiple cross-chain solutions [00:24:49]. For instance, Lido’s community decided to work jointly with both Axelar and Wormhole for asset minting, requiring approval from both validator sets [00:25:00]. This creates multiple layers of security, including two independent implementations and stacked rate limits [00:25:29].
While rate limiting can be juxtaposed with the high throughput of chains like Monad, cross-chain volume rarely matches the transaction speeds within a single chain [00:26:32]. Therefore, rate limits can still effectively cap potential damage to a small fraction of total funds [00:26:46].
Axelar’s Early Commitment to Monad
Axelar committed to supporting Monad at an early stage due to several factors:
- An early introduction via common investor, Dragonfly [00:28:50].
- Recognition of Monad’s technical founders’ legitimacy and focus on scalability [00:28:58].
- The strong MIT connection between the teams [00:29:13].
- Monad’s rapidly growing and decentralized community [00:29:30].
- Anticipated demand from builders for Axelar’s presence on Monad, driven by the desire to be first on new, promising ecosystems [00:29:53].
- Monad’s instant finality is crucial for faster cross-chain messages, improving user experience for cross-chain applications [00:16:57].
Future of Interoperability
In the long term, interoperability is not a “killer use case” itself, but rather a fundamental layer that enhances user experience and makes Web3 as intuitive as Web2 [00:31:07]. It aims to fully abstract away the underlying complexities of different blockchains from the user [00:31:38].
Axelar believes interoperability will become ubiquitous across all Web3 verticals, including DeFi (e.g., Uniswap, dydx, Frax, Lido), gaming (e.g., Immutable, Decentraland), and real-world asset tokenization (e.g., Ono, Centrifuge, Mountain Protocol) [00:32:11]. The Axelar Virtual Machine (AVM) is specifically designed to support this future where interoperability is integrated into every application [00:33:04].
Final Alpha
In crypto, while narratives change quickly and attention is often fleeting, long-term success is built on strong technology and a robust community [00:34:21]. Projects like Monad, possessing both, are special [00:34:41]. Ignoring the noise and focusing on projects with amazing tech and strong communities is key for long-term engagement [00:34:48]. Founders with conviction in their vision are critical for project success, and users should maintain their own convictions amidst market hype to stay focused [00:35:59].