Governance and Grants

Axelar governance is conducted on-chain and is open to all AXL token holders. Any change to the network that affects core operations—such as validator rewards, inflation rates, chain onboarding, or upgrades—must go through a governance proposal. These proposals are submitted and discussed within the community before they are voted on by validators. Governance ensures that Axelar evolves in a way that reflects the priorities of the network’s participants.

AXL holders can delegate their tokens to validators who vote on proposals on their behalf. Delegation is flexible, allowing holders to change their chosen validator at any time. Validators are expected to vote in a way that reflects the interests of their delegators, though the voting power ultimately remains tied to the amount of AXL staked.

Axelar also supports growth through a grants program that is governed by the community. Proposals for funding must demonstrate alignment with the network’s goals, such as increasing adoption, developing new tools, or improving infrastructure. Grants are reviewed through public forums and voted on by the community. Approved grants are disbursed from treasury allocations designated for ecosystem development.

Proposals Overview

A proposal in Axelar governance can cover topics such as changing validator rewards, updating economic parameters, deploying new features like the Axelar Virtual Machine, or adding support for a new blockchain. Each proposal follows a defined lifecycle: submission, discussion, voting, and execution. This ensures transparency and accountability in protocol-level decisions.

Before submission, proposals are often introduced in the community governance forum for feedback. This phase allows stakeholders to assess feasibility, suggest improvements, and identify risks. The more thorough this phase is, the more likely the proposal will gain consensus before formal voting begins.

Once a proposal is submitted, it enters a voting period during which validators cast votes based on their delegated stake. Voting options typically include “Yes,” “No,” “No with veto,” or “Abstain.” A proposal passes if it reaches the required quorum and majority threshold, with special rules applying if “No with veto” votes are high.

Proposal Voting

Voting is primarily handled by validators, but token holders influence the outcome by delegating their stake. Validators have an obligation to participate actively in governance, and their voting history is publicly visible. This transparency allows delegators to choose validators based on their governance track record.

Votes are weighted by the amount of AXL delegated to each validator. If a delegator disagrees with how their validator voted, they can switch delegation or participate directly by running their own validator node. This structure balances representation with accountability.

Voting periods are fixed and give ample time for validators and the community to assess proposals. If a proposal lacks clarity or risks negative consequences, validators can choose to vote “No with veto,” which signals strong opposition. If a high percentage of voters choose this option, the proposal is rejected and penalized.

Inflation and Fee Parameters

Axelar’s inflation and fee structures are subject to governance control. Inflation provides the rewards needed to compensate validators and delegators for securing the network. However, because excessive inflation can dilute value, the rate must be carefully managed. Governance proposals can be submitted to adjust the inflation rate or change how rewards are distributed across validators and chains.

Fee parameters are also configurable. Axelar collects fees from cross-chain operations, which can be paid in AXL or source-chain tokens like ETH, AVAX, or USDC. These fees are routed to validators and, in some cases, burned to reduce total supply. Governance can determine how much of the fees are burned, distributed, or allocated to treasury functions.

When new chains are connected to Axelar through the Interchain Amplifier, governance can decide how to incentivize validators to support them. This is often done through capped reward pools using AXL from the existing supply. Governance sets the amount and duration of these pools based on expected usage and technical needs.

The AXL Token & the Cross-Chain Future

The AXL token connects governance, security, and utility in the Axelar network. Through staking, it enables validator selection and incentivizes honest behavior. Through governance, it gives token holders influence over protocol direction and economic policy. And through fee conversion, it acts as the backbone for cross-chain activity.

As Axelar expands to support more blockchains and new types of applications, the role of AXL becomes more important. Governance will continue to decide how the protocol evolves—whether by enabling new features, funding ecosystem growth, or adjusting incentive structures to maintain performance.

The token also plays a part in Axelar’s permissionless scaling model. When new chains join via the Interchain Amplifier, AXL is used to bootstrap support and manage validator incentives. This allows the network to grow without needing centralized coordination or constant issuance.

Highlights

• Axelar governance allows AXL holders and validators to propose, discuss, and vote on protocol changes, including inflation, rewards, and chain integrations.
• Proposals follow a structured process—discussion, submission, voting, and execution—to ensure transparency and alignment with network priorities.
• Voting is conducted by validators based on delegated stake, with options like “Yes,” “No,” and “No with veto” used to evaluate and filter proposals.
• Governance controls economic parameters such as inflation rates, fee distribution, and validator reward structures to maintain long-term sustainability.
• The AXL token links staking, governance, and cross-chain utility, giving token holders the ability to shape the network’s evolution and expansion.