Circle’s Axelar Deal Ignites AXL Crash and Token-Equity Backlash
Circle's latest strategic move with Axelar didn't just raise eyebrows—it sent the AXL token into a tailspin and lit a fire under the crypto community's simmering debate over tokenomics versus traditional equity.
The Deal That Sparked the Sell-Off
News of the partnership hit the wires, and the market reacted instantly. AXL holders didn't see a strategic alliance; they saw dilution. The token price cratered as the narrative shifted from interoperability promise to a classic case of value extraction. It's the kind of move that makes retail bag-holders wonder if they're funding the venture round.
Equity vs. Token: The Eternal Tension
This isn't just about one token's bad day. It's a spotlight on the fundamental rift in crypto's soul. On one side, you have the purists preaching decentralized tokenholder alignment. On the other, the venture-backed builders who still treat equity as the 'real' cap table. Circle's play with Axelar is a masterclass in having your cake and eating the equity too—a move so slick it would make a traditional investment banker blush, if they understood any of it.
The backlash was swift and venomous across social channels. Accusations flew of misaligned incentives and backroom deals that benefit insiders at the expense of the community. It's the crypto version of watching the executives get golden parachutes while the stock plummets.
Why This One Stings
Axelar wasn't just any project; it was a beacon for cross-chain communication. The deal with Circle, a giant in the stablecoin space, was supposed to be a validation. Instead, it became a cautionary tale. It proves that in the hybrid world of Web3, when big money talks, tokenholders often get the bill—another reminder that in finance, whether digital or not, the house usually wins.
Circle’s Axelar-linked acquisition sparks backlash
Circle said the deal, expected to close in early 2026, covers only Interop Labs’ team and proprietary IP to accelerate development of its Cross-Chain Transfer Protocol (CCTP) and Arc blockchain. Axelar, the Foundation, and the AXL token will continue operating independently under community governance, with Common Prefix taking Interop Labs’ former responsibilities.
However, that clarification did little to calm investors. Many AXL holders argued that Interop Labs was effectively the protocol’s Core builder, making the separation between “team” and “token” feel artificial. The backlash unfolded largely on X, intensifying within hours of the statement.
“Token vs equity” narrative takes over X
Chainlink advocate Zach Rynes, known as ChainLinkGod, described the situation as “yet another example of the token vs equity conflict of interest problem plaguing crypto.” He argued that token holders who funded development were left with nothing, while the team secured a successful exit.
Yet another example of the token vs equity conflict of interest problem plaguing crypto
Dev team behind a protocol get successfully acquired, tokenholders who funded that team get nothing
"continue to operate independently under community governance" = dev team rugging you for… https://t.co/FcbGt9vCFe pic.twitter.com/tFe3VASJqx
Jacob Phillips, co-founder of Lombard Finance, echoed the sentiment, posting that Axelar’s “core team” being acquired made AXL “likely worthless,” noting that the token launched more than three years ago and the team was already fully vested.
Great 2025 trend: Tokens fighting for ownership
Big thing still missing: "Related Entities" clauses with Founding Teams — a tactic commonly used by VCs to ensure value cannot be diverted by teams working on other projects.
For Tokens/DAOs, the team is most of the value. https://t.co/9emN60fsv9 pic.twitter.com/MngTGDZvLD
Phillips later expanded on the issue, pointing to the absence of “related entities” clauses common in venture capital deals, which are designed to prevent teams from diverting value elsewhere. In token-based systems, he argued, the team itself is often the primary source of value.
Impact on trading
AXL’s price action reflected rising unease among investors. The token is trading NEAR $0.109, down 14% over the past 24 hours and roughly 20% from its weekly high. At the same time, 24-hour trading volume jumped above 40%, according to CoinMarketCap, pointing to panic-driven trading rather than organic demand.
The episode has reignited a familiar argument in crypto: whether tokens can really capture value when the people building the protocol are free to cash out through equity deals that bypass token holders entirely.
For Axelar investors, the deal hit a nerve. Old doubts about governance and alignment resurfaced, with holders questioning what a token means when the CORE team exits through a corporate deal.
As the backlash continues to unfold on X, the AXL sell-off highlights a deeper industry dilemma: whether token-based ecosystems can preserve investor trust when teams are free to walk away through equity deals, leaving communities to carry the project forward.
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