Blockchain // Interoperability // Cross-Chain // Web3 // Axelar Network
Published on Jul 01, 2024
Axelar Network’s Attempt Towards An Inclusive Ecosystem for Cross-Chain Integration
Blockchain comes with its own lexicon and “interoperability” is the word of the decade. Keep reading to learn how Axelar defines it.
TL;DR
In 2020, former Algorand developers launched Axelar — an overlay network that maintains any-to-any communication between dApps, ecosystems, and even liquidity. The universal network is built around:
1. Decentralized Network of Validators that run the nodes and maintain each ecosystem’s functionality by confirming transactions.
2. Secure Gateway Smart Contracts operate on publicly accessible networks, providing visibility into cross-chain transaction processes.
3. Software Development Kits and APIs simplify dApp builds.
//
Just ask a blockchain startup founder about the core proponents of cross-chain integration and you will hear three words — Security, Scalability, and Interoperability. While the former two primarily rely on your existing tech stack, interoperability still yearns for an escape from being a disparate system. Over the decade, a patchwork has been haphazardly stitched together for achieving a semblance of interoperability between exchanges, financial institutions, and correspondent banks.
But...
While this disparate system has frankensteined what’s desired from cross-chain integration (ignore settlements for a minute), underserved networks haven’t been that lucky. Between the multi-chain and emerging protocols not being well-established — let alone scalable — transaction delays and outlandish gas fees have resulted in friction at each link of this chain. Add tighter regulations from financial authorities like the IMF, and it quickly explains why interoperability hasn’t kicked off yet.
Why interoperability should NOT be an afterthought.
In a blockchain, interoperability can be defined as “the ability to exchange and process information across separate networks” — e.g. from Ethereum to Cardano, or from Cardano to Avalanche. While a single chain with its native token can quickly find its beneficiary — when multi-chain networks are involved, the process gets exponentially complex. Cross-chain transactions can go through a range of patchworks as well as ecosystems belonging to whichever entities involved in the transaction.
Imagine a Google Docs you created on your phone. Here, “interoperability” lets you email it as a Microsoft Word (.docx) attachment to your friend’s laptop, while another co-worker can edit it on a MacBook. Same data but accessible across different ecosystems!
Despite PSPs constantly innovating their way through “patchworks” — it has led to a somewhat hollow software infrastructure that hasn’t expanded to incorporate non-native chains. If you are a blockchain engineer or a product manager, you already know the struggle of wrestling with interoperability — lack of standardization makes it challenging to interact — while fragmented systems inhibit scalability and overall adoption. However, a paradigm shift is already underway.
And that brings us to Axelar.
Top Picks by Rupak
Top picks by Rupak
01
02
03
04
05
06
How Axelar is bridging the gap between isolated chains.
Built on the Cosmos SDK, Axelar is secured through network validators using the Proof-of-Stake (PoS) model. Part of what makes Axelar unique is its light-client software on other blockchains, enabling validators to verify the state of those chains. Add the fact they also hold the threshold signature accounts — this way, Axelar acts as a routing system instead of a bridge that constantly needs “patchworks” whenever separate blockchains opt for a different programming language.
80% of DeFi hacks are related to compromised bridges in cross-chain transactions.
Dozens of projects have made their attempt to remedy the problem from different angles. Again, the keyword being “different” here, most solutions such as bridges, exchanges, and hubs have led to a fatal failure. Axelar — on the other hand — opted for a route beyond bridges, seeking to enable decentralized, any-to-any communication, while preserving the first two proponents of cross-chain integration — Security and Scalability. Their analogy, “Axelar is like Stripe for Web3!”
“Interoperability goes beyond moving from point A to B.”
That’s Sergey Gorbunov — one of two co-founders and CEO of Axelar — from an interview with Cointelegraph. The gradual shift to decentralized payment solutions has pushed the demand for interoperability. However, the question is no longer how to connect multiple chains, but rather, how to integrate legacy infrastructure that includes dApps and users. Once figured out, cross-chain and multi-chain capabilities would come to define blockchain technology. The unicorn founder adds —
"We need an ability for the users to execute one call on one chain, and that transaction actually taking place on other chains without them having to go and get a native token of that chain, pay gas, execute themselves, and move back and forth across ecosystems.”
The company was founded in 2020, with a premise that cross-chain and multi-chain transactions would further attract venture capital and fresh contributors. There’s a seemingly underrated benefit beyond better user experiences. For instance, interoperable chains can have unified liquidity, resulting in lower gas fees on transactions. Gorbunov firmly believes that building attributes like simpler experiences is the way forward towards making Web3 just as seamless as existing Web2.
Interoperability is the missing piece in dApps and WaaS.
If you had to build a dApp right now — what would be your concern? Figuring out the ‘talent’ or the ‘tech’ problem? Surely not! Any partial lack of interoperability forces developers to choose one ecosystem unless users have to bear the hassles of chain-switching. Despite L2s rolling up via Arbitrum or Polygon — the question is still “How Ethereum is going to preserve interoperability without Overlay Networks?” We’d need to solve those overheads that the L2 explosion will bring.
An eight-figure capital on Crunchbase, some world-class engineers, a singular vision — and you’ve got the blockchain part all figured out. What’s not in your control is still the interoperability part. Despite having compelling solutions, digital assets cannot compete against legacy payment infra by operating in siloed networks — neither can stablecoins. For it to succeed, Axelar needs as many projects under its overlay networks as it possibly can handle. And that leads to one final question!
Can Axelar be the reason interoperability takes off in '24?
On a panel discussion at KBW, co-founder Georgios Vlachos pointed out how disputable economic activities could become, given the number of enterprises that are building cross-chain and incentivized to launch their own version of L1s. Singular chains won’t be sufficient to handle more than 10 million transactions per day, far below a daily average of 530 million transactions handled by Visa alone in 2022. Scaling this, however, in an order of this magnitude, is “really, really hard.”
“The answer is to scale horizontally and create many, many different blockchains.”
Even for an average user, understanding blockchain is easier said than done. Add the fact that 91% of adults failed this relatively basic online quiz on wallets and decentralized finance, that kind of widespread ignorance is an industry problem. Most people don’t know how to use such products because they really don’t have a need to. The death of “chain tribalism,” and an end to cross-chain bridge hacks are the indications that blockchain’s 2nd innings would be an interoperable one.
And it’s gonna be, “Can your contract talk to mine?”
Rupak Bid // Content Strategist for Web3 and SaaS Brands
I'm the former Head of Content at Burency Global. My experience in working with startups — as well as delivering content to Fortress Trust, Messari, and Immutable — brings you decades of learning from building Web3-specific strategies. Have a project or planning to enter the Web3 space? I can:
-
Help your brand with hyper-personalized content strategies.
-
Help your brand to build a community of informed users.
-
Help your brand with product launches and ICOs.
-
Offer you Fractional Marketing roles and advisory.
-
Build an extensive catalog of content that keeps converting.
I treat content as a product — and just like any product — content needs constant improvements. My job is to design the content strategy for your brand, monitor the CTA catalysts at each step, and if they’re not working, decide a different one. By signing me, you are working with someone who:
-
Helped a brand hit 47,000 users and assisted many ICOs.
-
Tells stories to drive interactions and how they worked.
-
Turns demand into data, and then, data into Dollars.
-
Starts a flywheel of growth, until community takes over.
-
Most importantly, sees you as a partner, not just a client.
You seem like someone I love to work with — a Startup, an Entrepreneur, or a Thought Leader? If my service offerings seem exactly like what you might be looking for, I’d be excited to learn about your project. Please reach out on LinkedIn or book a discovery call at https://www.rupakbid.com/#book.