Why Did Circle’s Latest Move Cause A Drop in Axelar’s Price?

Stablecoin issuer Circle has acquired Interop Labs, the initial developer of the Axelar network.

This deal excludes the Axelar Network, Foundation, and AXL token, which will continue to operate independently. Common Prefix will take over development responsibilities.

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Circle to Bring Interop Labs Team and Technology In-House

Circle, the company behind the second-largest stablecoin USDC, announced that it has entered into an agreement to acquire Interop Labs’ team and proprietary technology.

The stablecoin issuer plans to integrate this team to accelerate progress on its Arc blockchain and Cross-Chain Transfer Protocol (CCTP). Circle said it expects the acquisition to close in early 2026.

Meanwhile, both Circle and Interop Labs emphasized that the deal does not include the Axelar network.

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Common Prefix, a long-time contributor to the Axelar Network, will now lead the network’s development. In a recent X (formerly Twitter) post, the team outlined its main priorities for 2026.

The 2026 focus areas include expanding Axelar through new protocols and asset classes, reallocating away from underperforming chains, introducing co-staking of blue-chip assets to strengthen economic security, preparing the network for institutional use through improvements in privacy and compliance, and exploring gasless bridging to enable zero-fee transfers using idle gateway capital.

Market Reaction and Community Concerns

The market reacted quickly to the acquisition news. The AXL token’s price plunged, extending its broader downtrend. At the time of writing, the altcoin traded at $0.11. This represented a decline of nearly 13% over the past day.

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However, it’s worth noting that the decline is not isolated. Over the past day, the broader cryptocurrency market has declined by nearly 4%, with major assets such as Bitcoin and Ethereum in the red.

The move has also caused concerns among some community members. Crypto commentator Nick described the deal as “very concerning” for AXL holders.

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Furthermore, another analyst stressed that the situation highlights what they described as the “token versus equity problem” in the crypto industry.

The commentator also noted that although Common Prefix has stepped in as the network’s new lead developer, there is no obligation for any team to remain indefinitely.

While the announcement has clearly shaken confidence among AXL holders, the project’s future now hinges on whether Common Prefix can successfully execute its roadmap and rebuild trust in Axelar’s long-term value proposition.