Due to the growing demand for decentralization and full-stack interoperability in the market, Axelar's cross-chain technology saw an explosive growth in applications in 2023. On February 13th, the cryptocurrency research firm Messari released Axelar's Q4 2023 development report, which detailed the latest project progress and related data of Axelar.

How to define Axelar?

Axelar Network (AXL) is a Layer 1 (L1) network that enables cross-chain interoperability between various cryptographic ecosystems, i.e. cryptographic overlay networks. 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) that includes developer tools and APIs.

The technology of Axelar network aims to achieve more complex cross-chain functionality beyond simply transferring packaged assets to different networks. In order to avoid friction in cross-network operations, Axelar focuses on full-stack interoperability. This means that it not only supports bridging of any information/assets, but also supports cross-network execution of smart contracts and dApps.

Key Data

· In 2023, the number of networks supported by Axelar increased from 30 to 55. The construction of the cross-chain amplifier is to increase this number by connecting to new networks without permission.

· With the help of services such as Squid Flow Router, inter-chain transactions and active addresses have increased by 478% and 430% respectively. In terms of inter-chain transactions and transaction volume, Squid is usually the most active contract.

· The price of AXL has increased by 131% year-on-year. In the fourth quarter, the inflation caused by rewards per chain gradually decreased, easing the inflation pressure on AXL. Gas burning will also help reduce supply increases.

· The introduction of Axelar virtual machine and inter-chain token service expands the Axelar network from message transmission to a fully programmable cross-chain layer, such as maintaining the interchangeability and customized functions of cross-chain tokens.

In the fourth quarter of 2023, the total market value of cryptocurrencies experienced a sharp increase, mainly driven by market expectations for spot BTC ETFs. The circulating market value of AXL increased by 344% compared to the previous quarter, reaching 621 million US dollars, exceeding the overall growth of the cryptocurrency market by 54%. Due to the growth in the fourth quarter, AXL's market value increased by 1,076% year-on-year. As of the fourth quarter, its market value rose from 170th to 96th among all cryptocurrencies.

As of the end of the third quarter of year 23, AXL's inflation rate was 11.5%. However, in October, a new AXL token economics was proposed to gradually reduce rewards for each chain from 0.75% to 0.3%. Rewards for each chain are only related to non-native connected chains, such as EVM networks. The proposal was approved through on-chain voting and is gradually taking effect.

Due to the increase in transaction fees, the revenue generated by Axelar Network (denominated in AXL) increased by 5% month-on-month and 511% year-on-year (denominated in USD). In the fourth quarter, it grew by 78% driven by the appreciation of AXL price. The fees generated on the Axelar Network are paid to validators and stakers, but the current proposal will replace this system with a Gas mechanism.

In addition, the inter-chain network activity (i.e. transactions and active addresses) of the Axelar network steadily increased throughout the fourth quarter. General Message Passing (GMP) activity involves more complex logic than simple asset transfers and dominates network activity, accounting for 75% and 74% of total transactions and active addresses in 2023, respectively. Overall, inter-chain transaction volume increased by 5% MoM and 478% YoY, while inter-chain active addresses increased by 3% MoM and 430% YoY.

The inter-chain transaction volume and fees also showed quarterly and annual growth. The trading volume increased by 50% QoQ and 171% YoY. The fees increased by 103% QoQ and 546% YoY, with the fourth quarter and 2023 showing the highest growth among all inter-chain indicators. Part of this growth is due to the price increase of AXL in 2023, which drove up the fee indicator as fees are ultimately paid in AXL. From the user's perspective, fees can be paid in any currency, but the Axelar Gas Receiver converts these native tokens into AXL on the backend.

The Axelar ecosystem continued to grow throughout Q4 2023 and the year as a whole. As of the end of Q4, Axelar supports 55 chains, up from 30 at the beginning of the year, according to Axelar's 2022 review and 2023 look ahead.

Ecological system development and integration that are worth noting include:

· Connect to multiple Ethereum L2 networks (including Base, Scroll, Mantle, Optimism, and Arbitrum) and other networks (including Sei and Polygon).

· Onyx has partnered with JPMorgan and Apollo to focus on Real World Assets (RWA). Click here for more information.

· Launched Squid Router, a liquidity router that uses GMP to achieve cross-chain swaps and bridging. In terms of trading volume and activity, Squid Router has become the most active contract and is undergoing more integrations, such as dYdX planning to use Squid in its V4.

· Integrated with Vertex to support cross-chain deposits on Vertex's order book DEX on Arbitrum. The integration will initially support cross-chain deposits from Ethereum, Optimism, BSC, PoS, Base, Avalanche, Fantom, and Mantle. It will eventually support more chains accessible through Squid Router.

· Frax Finance announced that it will use Axelar as a cross-chain infrastructure to securely expand beyond its local bridges. This partnership aims to support the issuance of Frax assets on Osmosis, Mantle, Linea, Kujira, Manta, and Scroll.

· Enterprise and institutional integration, for example with Microsoft and Mastercard.

· DeFi integration, such as integration with Uniswap, Circle, and Lido. (Note: the content contains links in English and should not be translated. The Chinese characters should be translated as is.)

· Integration of encryption infrastructure, such as integration with Filecoin, Metamask, and Celestia.

Overall, the Axelar network began expanding from message passing to a fully programmable cross-chain layer in Q4 2023, enabling interoperability and customized functionality for maintaining token cross-chain. The Axelar virtual machine, inter-chain token service, and inter-chain amplifier are key technologies driving this growth. Astonishing growth has been achieved in all aspects of data.

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