Stablecoin giant Circle's announcement that it has reached an agreement to acquire the team and intellectual property rights of Interop Labs, the initial and core developer of the Axelar Network, triggered a sharp price reaction in the market. The fact that the agreement does not include the Axelar network or the AXL token disappointed investors' expectations, leading to a double-digit drop in the AXL price in a short time.
AXL token falls
According to market data, the AXL token saw a value loss of up to 13% on Tuesday. The main reason for the selling pressure was that the acquisition with Circle does not offer any direct economic benefit to token holders. Under the agreement, Circle is only taking over the engineering team within Interop Labs and the company's proprietary intellectual property elements. The Axelar Network itself and the AXL token are completely excluded from this process.
With Interop Labs engineers joining Circle, Common Prefix, a long-time contributor to the project, will take over a significant portion of the technical responsibilities within the Axelar ecosystem. While this structural change indicates that the development of the Axelar network will continue, the market's initial reaction was one of uncertainty regarding the token's economics. Axelar is known as an interoperability network aiming to enable communication and asset transfer between different blockchains. Circle's choice of this technology highlights the increasing criticality of cross-chain solutions, particularly in stablecoin and payment infrastructures. However, this strategic move weakened the AXL token's value proposition instead of strengthening it. Market participants quickly closed their AXL positions when they realized the acquisition did not provide token holders with any revenue sharing, buyback mechanism, or governance advantages. The deal not only failed to create demand for the token but also revealed that AXL holders were completely excluded from the economic benefits of the new relationship with Circle. This development paints an important picture of how mergers and acquisitions (M&A) are shaping up in the crypto sector. Recent deals appear to focus more on teams, engineering capabilities, and infrastructure suitable for enterprise use, rather than on tokens tied to open networks. In the case of Axelar, Circle's interest wasn't in the token itself, but directly in the technical expertise and know-how in interoperability. The resulting picture once again showed that the assumption "if the protocol is successful, the token also wins" isn't always valid. On the contrary, unless a structural link is established between the token economy and commercial agreements, such acquisitions can have negative consequences for the token price.
