Wormhole Outbids LayerZero With $120M Cash Offer for Stargate Finance

Wormhole Foundation has outbid LayerZero in the ongoing competition for Stargate Finance, offering $120 million in USDC for the cross-chain protocol, surpassing LayerZero’s $110 million token-swap proposal [1]. The cash-based offer, announced on August 23, provides STG token holders with immediate liquidity and reduces the uncertainty typically associated with token-based acquisitions [2]. This move has shifted the narrative around DeFi acquisition strategies, emphasizing the value of cash in securing stakeholder confidence and aligning with market preferences for immediate value realization.

Wormhole’s bid includes a requested five-day pause in the Snapshot vote to allow for a thorough review of Stargate’s financials, including bridge volume, total value locked (TVL), and treasury assets [3]. Stargate’s TVL stands at $345 million, with $4 billion in bridge volume recorded in July and a treasury of over $92 million [4]. Wormhole’s approach is seen as a more traditional and methodical acquisition strategy, diverging from the typical DeFi model by prioritizing due diligence and long-term value alignment for contributors and token holders [5].

The market has responded positively to the news. STG’s price increased by approximately 4.13% within 24 hours of the announcement, reaching $0.18 per token [6]. The heightened trading volume, which surged by 106%, suggests growing investor interest and confidence in the future of Stargate under a potential Wormhole-led acquisition. Additionally, Wormhole’s native token also saw a 6.3% increase, reflecting broader market optimism about the proposed merger [7].

Wormhole’s all-cash strategy could redefine how DeFi protocols are valued and acquired in the future. The cash offer removes the volatility and complexity of token swaps, offering STG holders a more transparent and immediate liquidity option [8]. This approach may set a new standard in DeFi M&A, where certainty and due diligence take precedence over speculative token mechanics. LayerZero’s original proposal included a 1:0.08634 ZRO token swap plus six months of revenue for stakers, but many holders favored the liquidity certainty of cash [9].

The potential merger between Wormhole and Stargate could solidify Wormhole’s position as a leading cross-chain infrastructure provider. By combining Stargate’s strong liquidity with Wormhole’s multi-chain integration capabilities, the merged entity could become a major hub for cross-chain activity. This move also has the potential to limit LayerZero’s influence in the space, given Stargate’s role in its existing cross-chain architecture [10].

The outcome of this bidding war could influence future DeFi acquisition practices and regulatory expectations. Cash-based offers simplify compliance and transparency, which may make them more favorable under evolving regulatory frameworks. If accepted, Wormhole’s bid could serve as a template for major cross-chain deals, encouraging other players to adopt similar strategies for liquidity-focused and stakeholder-aligned acquisitions [11].

Source:

[1] Wormhole Tops LayerZero With 120M USDC DeFi Acquisition (https://coinfomania.com/wormhole-tops-layerzero-with-120m-usdc-defi-acquisition/)

[2] Wormhole Raises Stargate Bid to $120M in Cross-Chain ... (https://www.ainvest.com/news/wormhole-raises-stargate-bid-120m-cross-chain-showdown-2508/)

[3] Wormhole Pushes $120M Cash Bid to Rival LayerZero's ... (https://blockonomi.com/wormhole-pushes-120m-cash-bid-to-rival-layerzeros-stargate-deal/)

[4] Wormhole Foundation Counters LayerZero Bid with $120M ... (https://coincu.com/news/wormhole-120m-stargate-bid/)