LayerZero Proposes $110M Stargate Buyout and STG-to-ZRO Token Swap

LayerZero Foundation has initiated a $110 million acquisition of the Stargate cross-chain bridge, a project co-founded in 2022. The proposal aims to integrate Stargate more closely with LayerZero’s ecosystem by retiring the STG token and replacing it with ZRO at a rate of 0.08634 ZRO per STG [2]. This move would effectively centralize control of the bridge under the LayerZero Foundation and dissolve the existing Stargate DAO [2]. Any future revenue from the bridge will be used for ZRO buybacks, and STG holders will retain the right to swap their tokens indefinitely via a redemption contract [2].

The announcement has already triggered a positive market reaction. Both STG and ZRO tokens have seen price increases, with STG rising around 12% to $0.188 and ZRO up approximately 15% [2]. As a result, the implied value of the acquisition has risen to about $127 million [2]. LayerZero CEO Bryan Pellegrino stated that the acquisition would allow Stargate to pursue an “aggressive roadmap” and foster deeper integration into the LayerZero stack [2].

Stargate has facilitated over $70 billion in cross-chain transactions since its launch, making it one of the most utilized bridges in the blockchain space [2]. However, the STG token—once valued at $4.14—has fallen below $0.20, leading to concerns over the fairness of the proposed exchange rate [2]. Some community members argue that the buyback mechanism may not adequately compensate STG holders for the loss of the token’s independent value [2].

The acquisition is subject to a DAO vote requiring a 70% majority from STG holders and a quorum of at least 1.2 million veSTG [2]. If approved, the move will mark a significant shift in the governance model of decentralized protocols and could influence future strategies in the broader blockchain industry [2]. The consolidation of cross-chain infrastructure is gaining momentum, with proponents highlighting the benefits of streamlined development and enhanced security [2]. However, questions remain about whether the current valuation of Stargate justifies the proposed buyout, particularly given its historical performance and potential future revenue.

The outcome of the vote will determine the future trajectory of Stargate and its role within the LayerZero ecosystem [2]. This development underscores the evolving nature of decentralized governance and the growing trend of centralized takeovers within the blockchain sector.

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[2] LayerZero Proposes $110M Buyout of Stargate Bridge, Token Swap for ZRO (https://financefeeds.com/layerzero-proposes-110-million-buyout-of-stargate-bridge-token-swap-for-zro/)