Axelar's Elephant Turn: Can "Virtual Machine + Inflation Reduction" Drive the Multichain Sector Toward a Midgame Shift?
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Axelar's Elephant Turn: Can "Virtual Machine + Inflation Reduction" Drive the Multichain Sector Toward a Midgame Shift?
AVM goes live + AXL tokenomics upgrade—Axelar is making the multichain narrative sexy again by integrating cross-chain liquidity.
Navigating Web3 tides with focused insightsAuthor: Tiana
Last weekend, the legendary BOME emerged out of nowhere, skyrocketing by thousands of times and sweeping across the entire crypto market, igniting yet another wave of MEME investing frenzy. Behind this MEME mania, everyone's FOMO psychology has reached an unprecedented peak.
Looking back at this bull run, BTC first showed strong recovery, followed by rotating market focus shifting to AI and MEME sectors... After a long period of dormancy, the crypto market has entered its biggest celebration in nearly three years. The market is blooming with diverse opportunities—SOL and BNB surged as popular public chains benefited significantly, while Layer 1 and Layer 2 networks competed fiercely in innovation, signaling that the multi-chain ecosystem has arrived at its best developmental moment.
Against this backdrop, Axelar Network—a leading player in the emerging cross-chain interoperability sector—is drawing widespread community attention. In particular, a recent proposal to burn gas fees and transform the AXL token from inflationary to deflationary could result in burning over 100 million AXL tokens annually, sparking extensive discussion. In this article, we will deeply analyze Axelar from three key dimensions: the launch of the Axelar Virtual Machine (AVM), AXL entering a declining inflation mode, and the upcoming AXL token burn mechanism—could it become the next undervalued gem amid sector rotation trends?
The Underestimated Upgrade: Axelar Virtual Machine Launch and Comparable Tokenomics of Major Public Chains
In recent analyses and research, Axelar has gained broad optimism and become a market favorite, largely due to its "three pillars" of 2024 development: the launch of the Axelar Virtual Machine (AVM), AXL transitioning into a declining inflation phase, and the upcoming AXL token burn mechanism. Let’s examine each one.
During last weekend’s BOME craze, Axelar completed a critical move—deploying an upgrade to v0.35 to support the virtual machine (AxelarVM). Thanks to its powerful programmability, developers can now write smart contracts on Axelar, enabling operational cross-chain tasks.
Currently, more and more projects are integrating with the Axelar Virtual Machine, including Celestia, Centrifuge, Coinbase Base, MobileCoin, NEAR, Shardeum, StarkWare, zkSync, among others—all actively working to expand and integrate within its ecosystem. With the arrival of the Axelar VM, Axelar has transcended its singular identity as just a cross-chain protocol, unlocking far broader ecological prospects and imagination.
This technical upgrade also opens up new possibilities for Axelar’s tokenomics design. Because of AVM’s programmability, new blockchains can achieve full-chain compatibility more easily without requiring point-to-point support from Axelar’s technical team, enabling scalable growth. Meanwhile, post-upgrade, any newly added EVM nodes must hold AXL tokens in advance, which will help significantly reduce circulating supply and establish a new deflationary logic.
After the AVM upgrade, Axelar’s technology and tokenomics now possess the architectural framework of a Layer 1 blockchain: EVM node staking, user staking, and gas fee burning.
An Overview of Axelar’s Token Economics Post-AVM Upgrade
From an economic model perspective, AXL is Axelar’s native token, with an initial supply of 1 billion tokens, issued through inflation. Previously, this inflation-based incentive model effectively motivated the community, allowing the Axelar network to smoothly handle over $7 billion in cross-chain transaction volume and hundreds of thousands of on-chain requests. However, high inflation rates also contributed to weakening price momentum over time.
Now, change has finally arrived. Recently, a key proposal previously passed by Axelar has entered implementation—aimed at reducing inflation. The original formula for AXL inflation was a base rate of 1% plus 0.75% per connected chain (14 chains), resulting in a total inflation rate as high as 11.5%. The new proposal reduces the inflation rate per external chain to 0.3%, and with only five major chains factored in, the total inflation rate drops to 6.7%. From the standpoint of token value capture, Axelar has already established its own system—building a full-fledged blockchain with staking, gas fee burns, governance mechanisms, repeated and re-staked tokens—combined with a significantly reduced inflation rate, all directly benefiting AXL.
Additionally, to promote healthy network development, Axelar plans to shift the AXL token from inflationary to deflationary via gas fee burning. Currently, processing a single cross-chain message costs about 0.2 AXL tokens. If the network handles 100,000 transactions daily, it would collect roughly over 100 million AXL tokens annually in gas fees. By burning these AXL tokens used as gas, Axelar could offset up to 10% of its inflation, achieving net deflation for the token.
It is reported that this proposal has already been approved, although the plan to use AXL as the network’s gas token and implement burning has not yet been deployed on the mainnet. This is expected to be one of Axelar’s key focuses in 2024.
Certainly, under the convergence of multiple driving forces, both the Axelar network and the AXL token are entering their best developmental stage. Most importantly, AXL remains in an absolutely early participation phase—full of opportunity.
When Is the Best Time to Invest in Axelar? Written on the Eve of a Major Breakout
Beyond technological faith, visible wealth creation effects serve as a major attraction drawing crowds into the crypto space. At the peak of FOMO sentiment, keeping a clear head and identifying real value is something we need more than ever.
From a market perspective, BTC is currently near all-time highs, hovering just below the $70K mark. After the Cancun upgrade, ETH’s ecosystem and various other public chains have entered an accelerated development phase. SOL and BNB have performed exceptionally well in this bull market, becoming its biggest beneficiaries. Overall, the explosive growth of the crypto industry is fueling a boom in diverse public chain ecosystems.
Following the hype around AI and MEME ecosystems, Axelar and the broader cross-chain interoperability sector are now gaining momentum. As sector rotation continues, Axelar—the front-runner in its category with multiple catalysts aligned—has a strong chance of becoming the next super爆款 (breakout star). The good news is, impacted by recent pullbacks, AXL is currently trading at a阶段性 (phase-based) low price. Before broad market consensus forms, a price around $1.80 represents an optimal entry point to accumulate positions.
According to Progrmd Capital’s latest valuation analysis of Axelar using P/E ratio estimates—even under conservative assumptions regarding cross-chain market share—if Axelar captures 25% of blockchain transaction volume, its annual gas revenue alone could reach $309 million. Using a 30x P/E ratio, the conservative valuation potential stands at $9.3 billion. If market share reaches 50%, boosted further by bull market dynamics, this valuation could soar to $114 billion. In medium to long-term outlook, AXL possesses hundredfold potential.
Overall, Axelar is a technically robust and ecologically strong project—an ambitious omnichain L1 platform with vast growth potential, backed by prominent investors such as Binance X and Coinbase Ventures.
Considering Axelar’s sector potential, along with the orderly release of favorable developments like declining AXL inflation and the upcoming token burn mechanism, Axelar is poised for rapid growth. In the long run, the deployment of the Axelar Virtual Machine will act as the golden spark igniting this super rocket. As its ecosystem expands and explodes, the sky is truly the limit.
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