The AXL Token & the Cross-Chain Future

Staking rewards and Axelar network security

In Byzantine systems, such as permissionless blockchain-based networks, security is founded on the level of decentralization in the network. Nodes must be diverse, in order to be robust against a network attack.

Network diagrams showing compromised nodes (red) in an m of n multisig using 9 nodes, vs. a more secure and decentralized system using many nodes.

Rewards

Axelar network validators produce new blocks, participate in multiparty signing and vote on external chain states. Tokenholders stake the AXL token, delegating tokens to a validator’s staking pool and receiving rewards, minus the validator’s commission. Rewards on the network are inflationary, increasing the total supply of tokens.

Governance

The AXL token is used for governance, allowing stakers to exercise governance over proposals, such as a parameter change or protocol upgrade.

Supply

At genesis, 1 billion AXL tokens will be minted. The token supply will be released on linear schedules ranging from 6 months, for community sale participants, to 4 years, for team members.

Deflationary potential

There is potential for AXL token supply to become deflationary. We mentioned above that users do not need to hold AXL in order to transact over the network. Users pay all gas fees in the source-chain token. Services running on Axelar network convert source-chain tokens into:

  • AXL, for Axelar network fees, paid to AXL stakers and validators.
  • Destination-chain tokens, for gas on the destination chain.

Transaction-fee mechanism

Every Axelar network transaction will involve AXL fees. Network services will buy the AXL token, in order to make fee payments completely seamless for the user, so they don’t need to explicitly hold it to pay gas [they can, if they want to relay themselves].

A blockchain does what bridges can’t

As a blockchain that connects blockchains, Axelar provides superior security guarantees vs. pairwise bridges and networks that rely on federated multisig technology. It also is capable of running smart-contract logic. This enables functionality that other cross-chain networks cannot duplicate. Here are two examples:

  • Compounding network effects: Any newly connected chain can immediately communicate with all existing connected chains — the compounding of network effect described in Metcalfe’s Law.
  • As a blockchain, Axelar can also provide routing that connects any chain to any other chain. This is true at the scale of 1,000s of connected chains, and beyond.

How to stake AXL token & earn rewards

Axelar is built using Cosmos’ Tendermint SDK. Therefore, AXL token is supported by Cosmos ecosystem wallets such as Keplr and Cosmostation. Both are compatible with Ledger devices, using the Cosmos Ledger app. (A native Axelar ledger app is expected soon.) Both allow the tokenholder to delegate stake to their choice of validator(s).

Wallet & staking tutorials

Visit our page aggregating information for tokenholders. It includes tutorials for setting up Cosmostation and Keplr wallets, and Ledger devices, as well as guides to staking and bridging native AXL to and from other blockchains.

The Axelarscan explorer

In evaluating which validator to use for staking delegation, tokenholders may wish to review data, such as uptime or voting power. Axelar provides a block explorer, axelarscan.io, that includes this information as part of a wide range of network data. Axelarscan was originally built by Axelar community members and is now maintained by the Axelar team.

Recap & conclusion

Axelar network provides secure cross-chain communication and enables features to support dApps that will onboard the next millions of Web3 users.

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