‍TL:DR

• V1.2.1 "Cobalt" upgrade is live, sending AXL transaction fees to a burn address, strengthening tokenomics.
• Instead of incentivized inflation, newly connected blockchains contribute AXL into a reward pool used to compensate Verifiers that secure each new blockchain connection.
• With this upgrade, Axelar supports unlimited blockchain connections. Upcoming integrations include Monad, Solana, Stellar, TON and XRP Ledger

The Axelar Network has completed an upgrade to v1.2.1, following tokenholder approval in an on-chain governance vote. The upgrade, code-named "Cobalt,” implements new AXL tokenomics, sending network gas fees to a burn address. New blockchains are already connecting via Interchain Amplifier, which expands AXL utility as new integrations pool AXL from the existing supply to reward Verifiers.

The combination results in tokenomics and token utility designed to scale the Axelar Network securely and permissionlessly to an infinite number of blockchain connections. Now, Axelar is an engine for permissionless new connections at global scale – and AXL utility grows with each new blockchain connected.  

How the new AXL tokenomics enable interop at scale

Legacy AXL tokenomics relied on fees and inflationary rewards to bootstrap the network to 69 connected blockchains: Validators received added rewards for each new blockchain they supported. 

Now, new blockchains connect by setting up reward pools out of the existing AXL supply. These are used to reward Verifiers that support each new chain connection. 

Like most blockchains, Axelar initially rewarded tokenholders by distributing transaction fees paid in AXL tokens. All transactions that go through the Axelar protocol use the Axelar network underneath. Gas fees are abstracted, with users paying once in the source-chain token – which is converted by Axelar Gas Services into AXL and any other network gas tokens required to complete the cross-chain transaction end to end.  

With Cobalt, AXL gas fees are still abstracted, but instead of flowing to tokenholders, 98% of fees are sent to a burn address (2% of fees are still sent to the community proposals grant pool, as before). This mechanism was initially proposed by Axelar Foundation in October, 2023. Over time, it should counterbalance the network inflation rate, which is 4.8% as of Feb. 25, 2025, potentially leading to a deflationary state of the network.

“We are tokenizing interoperability. With this community-approved upgrade, Axelar is the only interoperability network with scalable tokenomics, powering decentralized infrastructure for a globally connected Web3.” 

- Georgios Vlachos, director at Axelar Foundation and co-founder of the Axelar protocol. 

Early metrics on AXL reward pools & gas fee burns

Recent connections Sui and Flow are currently locking  more than 300,000 AXL in Verifier reward pools, per month. All future blockchain integrations will be secured using Interchain Amplifier and this reward-pool mechanism. The current list of major blockchains set to integrate via Amplifier includes Monad, Solana, Stellar, TON, XRP Ledger, and dozens of L2s and application-specific blockchains that will be announced in the future. Data on reward pool balances and fee amounts sent to burn addresses are publicly available at multichain.money.

Axelar is the only interop protocol with a utility token

Axelar Network is capable of connecting all blockchains with the most distributed and robust liveness and security guarantee available. Unlike competitors, Axelar has no closed-source or custodial components. Instead, it is built on a public blockchain (Axelar) with a dynamic set of validators running proof-of-stake consensus, incentivized by the AXL token. 

The Cobalt upgrade hardens the incentive power of the AXL token and this upgrade comes after the recent release of Axelar’s powerful Mobius Development Stack (MDS) in October which includes the Axelar VM, Interchain Amplifier for fast new-chain connections and the Interchain Token Service (ITS) for rapid, multichain tokenization. 

Connect & scale with Axelar

New connections to the Axelar Network are subject only to on-chain votes by AXL tokenholders, and the integration is as simple as deploying a smart contract. The simplicity is part of the benefit of Interchain Amplifier, which streamlines the efforts needed to go crosschain by enabling one connection to Axelars 70+ network of chains. 

Are you a builder in Web3?

• Learn how Interchain Amplifier works for Verifiers and new connections: docs.axelar.dev. 
• Start building with Axelar's Mobius Development Stack (MDS): axelar.network/mobius.
• Track AXL reward pools + gas fees: multichain.money.

Join the community of Validators, Verifiers and node operators that secure the Axelar Network as it scales across Web3. 

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