Circle’s purchase of the Interop Labs engineering team and its intellectual property triggered a sharp market reaction for Axelar (AXL), as traders repriced the token amid uncertainty about who will drive future development.
Circle acquired the Interop Labs team and proprietary technology with the stated objective of strengthening its cross-chain capabilities and integrating that expertise into its Arc platform and the Cross-Chain Transfer Protocol (CCTP). CCTP is a mechanism designed to enable token transfers across different blockchains. Importantly, the agreement did not transfer ownership or control of the Axelar Network, the Axelar Foundation, or the AXL token itself.
Markets responded quickly: reports cited AXL losses ranging from about 13% to more than 18% as traders adjusted positions after parsing the deal terms. The price move reflected a market interpretation that the key engineering talent and codebase now sit inside Circle’s infrastructure, removing a direct pipeline of innovation and development from the token’s perceived growth narrative.
The acquisition explicitly excluded the Axelar Network, the Axelar Foundation and the AXL token, a distinction that coincided with reported AXL price drops in the mid-teens and raised immediate questions about token-holder value.
Community response and governance implications for circle
AXL holders and broader community participants expressed consternation over the carve-outs in the deal, arguing the transaction separated productive assets from token economics. “A moral ‘rug pull,’” read one characterization by some community members reacting to the exclusion of token and network assets. That phrasing captures the frustration among holders who expected the original development team to continue contributing to Axelar’s roadmap.
The deal reignited a wider debate about the alignment between token equity and traditional corporate equity. Critics contend that a structural issue is visible when foundational teams or IP are acquired while token holders—who purchased AXL expecting participation in future value creation—do not receive commensurate economic or governance compensation. Proponents of the transaction model counter that acquiring teams and technology can accelerate product integration at scale, albeit outside the token’s direct economic sphere.
Operationally, stewardship of the Axelar Network has transitioned to another contributor, Common Prefix, which will lead the network’s ongoing development. That handoff frames the immediate governance question: whether Common Prefix can preserve protocol momentum and community confidence in the absence of the original Interop Labs engineers now at Circle.
The acquisition underscored a practical tension in crypto M&A: corporate consolidation of engineering talent can advance platform-level strategies while simultaneously decoupling protocol tokens from the source of technical value.
