LayerZero Proposes $110M Stargate Bridge Acquisition with 1 STG to 0.08634 ZRO Swap

LayerZero Foundation has proposed a $110 million acquisition of the Stargate Bridge, aiming to integrate the cross-chain infrastructure and replace the STG token with ZRO at a fixed exchange rate of 1 STG to 0.08634 ZRO. The proposal, announced on August 2, 2025, represents a strategic move to consolidate governance, streamline tokenomics, and enhance liquidity across the omnichain ecosystem [1]. The acquisition involves transferring all operational responsibilities from the Stargate DAO to the LayerZero Foundation, while existing STG holders will have the opportunity to swap their tokens at any time after the proposal is finalized [1].

The proposed swap rate has already triggered a 20% surge in ZRO’s price and a 12% rise in STG, reflecting immediate market optimism about the potential synergies between the two protocols [2]. However, the terms of the acquisition have also sparked intense debate within the Stargate community. Critics argue that the 1:0.08634 ratio undervalues STG, particularly in light of its historical peak of $4 and the bridge’s significant growth in transaction volume and integrations [1]. Additionally, the removal of the 50/50 fee-sharing model—whereby stakers previously received a portion of bridge revenues—has been met with concern, especially among long-term holders who locked up their tokens to support emissions and governance [1].

The proposal requires approval from the Stargate DAO, with a seven-day discussion period followed by a three-day voting window on Snapshot. A 70% approval threshold and a minimum quorum of 1.2M veSTG are necessary for the acquisition to proceed [1]. If approved, the swap will not disrupt Stargate Bridge operations, and users will continue to experience the same level of functionality without interruption [1]. LayerZero CEO Bryan Pellegrino emphasized that the acquisition is a pivotal step toward evolving governance and tokenomics to meet market demands [1].

The timing of the acquisition has also attracted attention, particularly in light of the recent passage of the GENIUS Act in the U.S., which is expected to expand the stablecoin market significantly [1]. However, the current valuation does not reflect this anticipated growth, leading to questions about the long-term value proposition of ZRO, which currently lacks its own revenue stream [1]. Some community members have suggested alternative compensation models, such as a 1:1 swap or the inclusion of premiums for veSTG holders who have staked their tokens for extended periods [1]. Others have called for a delay in the voting process to allow for further negotiations and potential competitive bids from other market participants [1].

Despite the controversy, the acquisition aligns with broader industry trends where underperforming tokens are replaced or consolidated to streamline operations and improve efficiency [1]. If successful, the integration could accelerate Stargate’s roadmap and provide the necessary resources to expand beyond its core bridging function [1]. The outcome of the vote will be closely watched as a test of how decentralized governance balances strategic ambition with stakeholder interests in an evolving DeFi landscape [1].

Source:

[1] LayerZero Foundation acquisition of Stargate (STG) - General – Stargate DAO. (2025, August 2). https://stargate.discourse.group/t/layerzero-foundation-acquisition-of-stargate-stg/682

[2] LayerZero Proposes $110M Acquisition of Stargate Bridge. (2025, August 5). https://kanalcoin.com/layerzero-stargate-bridge-acquisition/