LayerZero Proposes $110M Acquisition of Stargate Bridge in Token Swap to ZRO

The LayerZero Foundation has proposed a $110 million acquisition of the Stargate cross-chain bridge, a project it originally launched in 2022, in a move that would see the STG token phased out and replaced by ZRO, LayerZero’s native token [2]. Under the proposal, STG holders would be able to exchange each token for 0.08634 ZRO, equivalent to $0.1675 per STG and $1.94 per ZRO at the time of announcement [2]. The deal, if approved, would dissolve the Stargate DAO and integrate the bridge into the LayerZero Foundation, with all future surplus revenue from Stargate being directed toward buying back ZRO from the market [2].

The proposal requires 70% approval from STG holders and will go through a seven-day discussion period on the Stargate DAO forum before a three-day Snapshot vote begins [2]. A quorum of at least 1.2 million veSTG is also required for the vote to proceed [2]. The token swap will remain available indefinitely through a redemption contract, giving holders flexibility without forcing immediate decisions [2].

Following the announcement, both STG and ZRO tokens saw positive price movements, with STG rising around 12% to $0.188 and ZRO gaining about 15% [2]. This increased the implied value of the deal from $110 million to roughly $127 million [2]. LayerZero CEO Bryan Pellegrino highlighted that the acquisition would provide Stargate with the resources to “ship on an aggressive roadmap” and integrate more deeply into the LayerZero ecosystem [2]. He emphasized the goal of creating a “single stack” for developers using the LayerZero platform [2].

Stargate has facilitated over $70 billion in cross-chain transfers since its launch, making it one of the most heavily used blockchain bridges [2]. However, the STG token, which reached a peak of $4.14 shortly after launch, has since fallen below $0.20 [2]. This has led to concerns from some community members, with one DAO participant arguing that the offer significantly undervalues Stargate given its revenue and growth potential [2]. Others have questioned whether the removal of STG as a standalone asset adequately compensates holders, despite the buyback mechanism [2].

The acquisition aligns with a broader trend in the blockchain industry of consolidating cross-chain infrastructure to improve efficiency and security [2]. Supporters argue that bringing Stargate fully in-house will streamline development and enhance performance [2]. However, critics remain skeptical, pointing to Stargate’s historical valuation and ongoing fee revenues as indicators of its potential worth [2].

LayerZero’s proposal represents a significant strategic shift and highlights the evolving dynamics of governance in decentralized protocols [2]. Whether the acquisition is approved will depend on the outcome of the DAO vote, which is expected to open soon [2]. The proposal’s success could reshape the cross-chain landscape and set a precedent for future integrations within the LayerZero ecosystem [1][2].

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[1]title1.............................(https://www.theblock.co/post/366246/layerzero-foundation-proposes-110-million-acquisition-of-stargate-bridge-as-token-struggles)

[2]title2.............................(https://financefeeds.com/layerzero-proposes-110-million-buyout-of-stargate-bridge-token-swap-for-zro/)