Circle, the issuer of USDC, has announced its agreement to acquire Interop Labs, the development team behind the Axelar Network, along with its proprietary intellectual property. However, Circle clarified that the deal “solely concerns the Interop Labs team and their proprietary intellectual property,” leaving Axelar and its native token AXL completely outside the scope of the acquisition. The announcement has triggered a strong backlash on social media, with many community members accusing the company of disregarding the rights of token holders who funded the project’s development.
Deal Details: Circle Eyes Cross-Chain Interoperability
In its official statement, Circle explained that the acquisition aims to advance native asset interoperability using its Layer 1 blockchain Arc, expand the developer experience and SDKs for multichain applications, and boost first-party app development. Nikhil Chandhok, Circle’s Chief Product and Technology Officer, said: “Our goal is to make blockchain connectivity seamless, and bringing the Interop Labs team into Circle will accelerate the Arc and CCTP roadmaps toward building the hub for multichain internet finance.”
Circle emphasized that the transaction is limited to the Interop Labs team and its intellectual property. Subsequently, Common Prefix, another contributor to Axelar, announced it would take over the responsibilities previously handled by Interop Labs to ensure network continuity.
Community Outcry: Token Holders Left Empty-Handed
The “acquire-the-team-but-not-the-token” approach has drawn sharp criticism. Mike Dudas, co-founder of The Block, lambasted the move, saying it continues “the pattern of screwing over non-CEO & key employee stakeholders in your [Circle’s] acquisitions.” Zach Rynes, Community Liaison at Chainlink, called this “yet another example of the token vs equity conflict of interest.” He added: “Dev team behind a protocol get successfully acquired, tokenholders who funded that team get nothing.”
Rynes declared that this is “the #1 issue our industry needs to solve if we want to attract serious capital.” The sentiment reflects a growing concern that when development teams exit via acquisitions, the tokens that once funded their work become effectively worthless to holders, disincentivizing future participation in token-funded ecosystems.
Impact on Axelar and the Cross-Chain Sector
The immediate effect on the Axelar network remains uncertain. While the change in development team could alter the project’s roadmap, the involvement of Circle — a centralized entity — in a cross-chain infrastructure layer raises questions about the network’s decentralization. AXL token price experienced volatility following the announcement, reflecting market anxiety over unclear token ownership and value accrual mechanisms. Industry observers warn that if such “team exits without token compensation” patterns become common, investor confidence in cross-chain and infrastructure projects could erode significantly.
FAQ
- What is the purpose of Circle’s acquisition of Interop Labs?
Circle aims to enhance cross-chain interoperability and improve the developer experience for multichain applications through this acquisition. - How does this acquisition affect the Axelar Network?
Circle confirmed that the deal focuses exclusively on the Interop Labs team and its intellectual property, with Axelar and its token explicitly excluded from the transaction. - What are the main criticisms from the community?
Critics, including Mike Dudas and Zach Rynes, highlight that this deal reflects a systemic failure to protect token holder interests, as holders receive no compensation when the development team is acquired. - What broader industry issue does this event underscore?
It underscores the persistent conflict of interest between token holders and corporate equity holders, which the industry must address to attract serious institutional capital.