Circle "withdraws" Axelar core team: The cross-chain ambitions of the stablecoin giant and the survival battle of open-source protocols

The world’s second-largest stablecoin issuer Circle announced that it has signed an agreement to acquire the initial development team of cross-chain protocol Axelar, Interop Labs, along with its proprietary intellectual property. The transaction is expected to be completed in early 2026. This acquisition aims to accelerate the development of Circle’s Arc blockchain and cross-chain transmission protocol CCTP, but explicitly excludes the Axelar network, foundation, and its token AXL. This “cherry-picking” style acquisition has immediately sparked significant controversy in the crypto community, criticized as “extraction” from open-source projects, and also signals that as regulatory frameworks become clearer, large compliant institutions are rushing to seize control of the core infrastructure of blockchain interoperability.

A “Spin-off” Acquisition: Circle’s Strategy and Axelar’s Declaration of Independence

Unlike typical full mergers and acquisitions, Circle’s approach this time appears highly precise and “picky.” According to an official statement, the transaction is strictly limited to Interop Labs’ team and its private intellectual property, while the Axelar network, its governance foundation, and the core ecosystem token AXL will continue to operate independently. This means Circle only takes the “brain”—the core development team—of this top cross-chain protocol, leaving the protocol itself to the community.

Behind this structural arrangement is a clear business logic. For Circle, the ultimate goal is to build an “open, interconnected, scalable on-chain economy.” Acquiring an experienced, ready-made cross-chain team is far more effective in accelerating its core strategy than developing from scratch. Especially, it can directly enhance the interoperability of Arc blockchain (positioned as “the internet’s economic operating system”) and CCTP (cross-chain transmission protocol), enabling assets issued on Arc to seamlessly circulate across hundreds of blockchain networks. Circle’s Chief Product and Technology Officer Nikhil Chandhok stated that this move will “accelerate the roadmap for Arc and CCTP to build a multi-chain internet finance hub.”

For the Axelar community, this is a severe test and an opportunity to reaffirm independence. Interop Labs co-founder Sergey Gorbunov said the team will work closely with Common Prefix (another major contributor to the Axelar project) to ensure a smooth transition and long-term support. The community needs to demonstrate that a decentralized protocol can continue to develop relying on open-source collaboration and community governance even after losing its founding core technical team. This itself is a real stress test for the concept of “decentralization.”

Community Anger and “Rug Pull” Accusations: Where Are the Boundaries of Morality and Business?

Following the announcement, the crypto community, especially participants and supporters of the Axelar ecosystem, reacted strongly. A widespread anger quickly spread. Simon Dedic, founder of venture capital firm Moonrock Capital, was notably critical on social media, calling this “yet another acquisition and another RUG (rug pull),” and fiercely criticized: “Circle acquiring Axelar but explicitly excluding the foundation and AXL tokens is outright criminal. Even if it doesn’t break the law, it violates morality.”

The core of these accusations lies in the imbalance of利益分配. Critics argue that Interop Labs’ team, by developing and operating the successful Axelar protocol, reaped substantial financial rewards (being acquired by Circle), while early supporters who contributed to protocol development, purchased, and held AXL tokens face the risk of shifting focus and development priorities. This is seen as a “betrayal” or “extraction” from open-source contributors and supporters.

Key information on Circle’s acquisition of Interop Labs

Acquirer: Circle (USDC stablecoin issuer)

Target: Interop Labs (initial development team of Axelar network)

Acquisition scope: Team and its private intellectual property

Explicit exclusions: Axelar network, Axelar Foundation, AXL tokens (all remain independent)

Expected completion: Early 2026

Core purpose: Accelerate cross-chain interoperability development of Circle’s Arc blockchain and CCTP protocol

Successor: Common Prefix team will take over Interop Labs’ responsibilities within Axelar

This controversy sharply raises a long-standing industry question: in the commercialization of open-source protocols, how should rights and利益分配 be fairly defined and allocated among core development teams, capital, and the broader community? Circle’s approach is fully legal and compliant in business, but from the perspective of the crypto community committed to “decentralization,” it may touch on moral boundaries. This incident is likely to serve as a moral benchmark for future similar acquisitions.

The Interoperability Arms Race Escalates: Big Compliance Players Seize Territory, Ripple Follows Suit

Circle’s acquisition is not an isolated event; it marks that after the competition in stablecoins, large compliant crypto institutions are entering an intense arms race around “blockchain interoperability.” Notably, on the same day, US-based major stablecoin issuer Ripple also announced a significant move to enhance interoperability—expanding to Layer 2 blockchain networks.

The synchronized actions of these two giants are set against the backdrop of the U.S. Congress recently passing legislation targeting stablecoins pegged to the dollar. Regulatory clarity has removed key obstacles for institutional entry. At this moment, whoever can build the most seamless and secure cross-chain asset flow network first will dominate the most critical pipelines and infrastructure in the upcoming stablecoin boom.

From this perspective, Circle’s acquisition of Interop Labs is more than just serving Arc blockchain. It is a crucial step in consolidating and expanding USDC’s position as the core stable currency in a multi-chain world. By internalizing top cross-chain technology, Circle can offer its institutional and enterprise clients better end-to-end compliant asset issuance and transfer solutions—an essential investment to build a moat in the next phase of competition.

The Future of Open-Source Protocols: Where Do We Go Without the Founding Team?

This acquisition also raises a practical question for the entire open-source crypto world: when a successful open-source protocol’s core development team is acquired by a commercial company, how should the protocol survive and develop? Axelar will serve as an important case study.

Optimistically, this could be a sign of open-source protocols maturing. The independent existence of Axelar network and AXL tokens means the protocol’s value no longer depends on a single entity but is determined by the security of its code, community governance effectiveness, and network effects. The transition led by Common Prefix and other community developers will test whether Axelar’s decentralization can withstand scrutiny. A successful transition will greatly boost community confidence and demonstrate that a robust open-source protocol has resilience against single points of failure.

However, challenges are evident. The loss of core talent may temporarily slow technological innovation and iteration. Market confidence may fluctuate, putting pressure on AXL token prices, despite the foundation having previously sold $30 million worth of AXL tokens to support development. Additionally, future competitive cross-chain solutions based on Interop Labs’ technology could directly challenge Axelar’s market position. The Axelar community needs to be more united and efficient than before to defend and even expand its territory amid this upheaval.