LayerZero Wins Stargate Acquisition Bid With 94.76% Community Support

LayerZero has secured the acquisition of cross-chain protocol Stargate following a four-way bidding war, after revising its initial offer to address concerns from Stargate token holders. The proposal, which initially faced criticism for being unattractive to STG token holders, was revised to allocate half of the platform’s top-line revenue to Stargate stakers for six months, with the remainder used to repurchase LayerZero’s ZRO token [1]. The revised offer received overwhelming support from the Stargate community, with over 15,000 addresses participating in the vote—94.76% of which represented 7.2 million STG tokens—voting in favor, marking the highest participation in any LayerZero governance vote to date [2].

Competitors including Wormhole, Axelar, and Across had also entered the fray, with Wormhole offering a $120 million all-cash deal, a 10% premium over LayerZero’s final bid [1]. Despite this, LayerZero’s token-based proposal, which converts all circulating STG tokens at a 1:0.08634 ratio into ZRO, gained traction among the Stargate community. Axelar and Across both expressed interest in submitting bids if the vote on LayerZero’s proposal had been delayed, but the Stargate Foundation clarified that the vote could not be paused and that all interested parties had been engaged under non-disclosure agreements [1].

The acquisition is seen as a strategic move for LayerZero, which has been actively expanding its cross-chain infrastructure. Stargate’s native liquidity pools, which allow for native asset transfers without relying on traditional blockchain bridges, align closely with LayerZero’s vision of secure and efficient cross-chain communication [1]. The deal also underscores the growing importance of community governance in DeFi, as token holders played a decisive role in selecting the winning bidder.

Analysts note that the competition among cross-chain protocols highlights the increasing value of interoperability in the crypto space. By integrating Stargate, LayerZero may enhance its cross-chain capabilities and potentially streamline asset transfers, reducing reliance on intermediaries. However, the success of the acquisition will depend on the seamless integration of Stargate’s user base and liquidity pools into LayerZero’s ecosystem, as well as continued support from the Stargate DAO [1].

The bidding war also reflects broader trends in the DeFi market, where token-based compensation is increasingly favored over fiat or stablecoin offers, particularly in projects with strong governance structures. As LayerZero consolidates its position, the acquisition could influence the next phase of DeFi development, emphasizing the importance of seamless interoperability in the rapidly evolving crypto landscape [2].

Source: [1] State of Crypto: Crypto Takes Jackson Hole (https://www.newsbreak.com/coindesk-1870864/4192616030001-state-of-crypto-crypto-takes-jackson-hole)

[2] 3CQS Crypto Screener (https://www.3cqs.com/crypto-screener/)