Circle acquires Axelar but doesn't touch the tokens: they want people and technology but $AXL collapses, retail investors are again cut?

Circle acquires Axelar development team but does not take over the tokens, sparking community outrage. From Vertex, Padre to Tensor, “want the team, want the technology, don’t want the tokens” has become a trend, marginalizing retail investors’ interests and highlighting the awkward positioning of cryptocurrency token rights.
(Background summary: Circle releases Q3 financial report: revenue surges 66%, net profit doubles to $214 million, USDC market cap surpasses $73.7 billion)
(Additional background: Circle partners with Aleo to launch privacy stablecoin “USDCx,” with transaction records and wallet addresses fully invisible)

Earlier this week, the Interop Labs team (initial developers of Axelar Network) announced they were acquired by Circle to accelerate the development of their multi-chain infrastructure Arc and CCTP.

In theory, being acquired is a good thing. But the detailed explanation from the Interop Labs team in the same tweet caused a huge stir. They stated that the Axelar network, foundation, and AXL tokens will continue to operate independently, with development work taken over by CommonPrefix.

This means the core of the deal is “team integration into Circle” to promote USDC’s application in privacy computing and compliant payments, rather than an overall acquisition of the Axelar network or its token system. The team and technology, Circle bought them. Your original project, Circle doesn’t care.

After the acquisition news was announced, the price of the Axelar token $AXL initially rose slightly then began to decline, currently down about 15%.

This arrangement quickly sparked intense community discussion about “token vs equity.” Several investors questioned that Circle, through acquiring teams and intellectual property, effectively gained core assets while bypassing the rights of AXL token holders.

“If you’re a founder wanting to issue tokens, treat them either like equity or get lost.”

Over the past year, similar cases of “want the team, want the technology, don’t want the tokens” have repeatedly occurred in the crypto space, causing serious harm to retail investors.

In July, Kraken’s Layer 2 network Ink’s foundation acquired Vertex Protocol, a decentralized trading platform based on Arbitrum, taking over its engineering team and trading technology architecture, including synchronized order books, perpetual contract engine, and money market code. After the acquisition, Vertex shut down its services on 9 EVM chains, and the $VRTX token was abandoned. Following the announcement, $VRTX dropped over 75% in one day, then gradually “went to zero” (currently only valued at $73,000).

However, $VRTX holders still had some solace, as they received a 1% airdrop at Ink TGE (the snapshot has ended). But it gets worse—tokens are simply invalidated without any compensation.

In October, pump.fun announced the acquisition of the trading terminal Padre. At the same time, pump.fun also announced that Padre tokens would no longer be used on the platform, explicitly stating there are no future plans for the token. Following the token invalidation announcement in the last reply of the thread, the token doubled in value then sharply dropped, leaving $PADRE with only a $100,000 market cap.

In November, Coinbase announced the acquisition of Tensor Labs’ Solana trading terminal Vector.fun. Coinbase integrated Vector’s technology into its DEX infrastructure, but did not involve Tensor NFT marketplace or $TNSR token rights. The Tensor Labs team has partially shifted to Coinbase or other projects.

$TNSR 's performance has been relatively stable among these examples, with a quick rise and fall. Its current price has returned to a level appropriate for an NFT market token and remains above the lows before the acquisition news.

In Web2, small companies being acquired by large corporations in a “team, technology, intellectual property but no equity” manner is legal, known as “acquihire.” Especially in the tech industry, “acquihire” allows big companies to quickly integrate talented teams and technology, avoiding lengthy in-house recruitment or development, thus accelerating product development, entering new markets, or boosting competitiveness. Although unfavorable to small shareholders, it stimulates overall economic growth and technological innovation.

Nevertheless, “acquihire” must adhere to the principle of “acting in the best interests of the company.” The community’s outrage over these crypto examples stems from the fact that token holders, as “minority shareholders,” do not believe that project teams are “acting in the best interests of the company” when they are acquired for better project development. Project teams often dream of going public in the US when the project is profitable, and when the project is just starting or failing, they issue tokens to make money (the most typical example being OpenSea). After profiting from tokens, they turn around to find new owners, leaving only their resumes behind.

So, are retail investors in crypto doomed to keep swallowing bitter pills? Just two days ago, Ernesto, former CTO of Aave Labs, published a governance proposal titled “$AAVE Alignment Phase 1: Ownership,” making a stand to defend token rights in the crypto space.

The proposal advocates that Aave DAO and Aave token holders should clearly control core rights such as protocol IP, branding, equity, and revenue. Representatives like Marc Zeller from Aave service providers publicly endorse the proposal, calling it “one of the most influential proposals in Aave governance history.”

Ernesto mentioned in the proposal, “Due to past events, some previous posts and comments have expressed strong hostility towards Aave Labs, but this proposal aims to remain neutral. It does not imply that Aave Labs should not be contributors to the DAO or lack legitimacy or capability, but that decisions should be made by the Aave DAO.”

According to crypto influencer @cmdefi, the root cause of this conflict is that Aave Labs replaced the front-end integrated with ParaSwap with CoW Swap, and the resulting fees flowed to Aave Labs’ private address. Supporters of Aave DAO believe this is a form of plunder, as with AAVE governance tokens, all benefits should prioritize AAVE holders or stay in the treasury for DAO voting. Previously, ParaSwap’s revenue continued to flow into the DAO, but the new CoW Swap integration changed that, leading the DAO to see it as theft.

This directly reflects a conflict similar to “shareholders’ meeting vs management,” again highlighting the awkward position of token rights in the crypto industry. In early industry days, many projects promoted “value capture” through tokens (such as earning rewards via staking or sharing profits). But since 2020, SEC enforcement actions (like lawsuits against Ripple, Telegram) have pushed the industry toward “utility tokens” or “governance tokens,” emphasizing usage rights over economic rights. As a result, token holders often cannot directly share project dividends—project revenues may flow to teams or VC-held equity, leaving token holders like unpaid small shareholders.

As exemplified above, project teams often sell team, technology, or equity to VCs or big companies, while selling tokens to retail investors. The final outcome is resource and equity holders profit first, while token holders are marginalized or left empty-handed. Because tokens lack legal investor rights.

To avoid the regulatory issue of “tokens being securities,” tokens are increasingly designed as “useless.” By circumventing regulation, retail investors are left in a highly passive, unprotected state. The various cases this year have, in a sense, reminded us that the current “narrative failure” in crypto may not be because people no longer believe in narratives—narratives are still good, profits are still attractive—but what exactly can we expect when we buy tokens?

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