Wormhole Challenges LayerZero's $0.1675 Stargate Buyout Offer

Wormhole’s sudden challenge to LayerZero’s $110 million acquisition of Stargate has sparked uncertainty in the decentralized cross-chain ecosystem, raising questions about whether the deal can proceed as planned. On August 21, the Wormhole Foundation announced its intention to submit a higher bid for Stargate, arguing that LayerZero’s offer undervalued Stargate’s protocol assets and growth potential. To support this claim, Wormhole requested a five-day suspension of the ongoing Snapshot vote to allow for a more competitive bidding process and protect STG token holders from an unfair outcome [1].

The LayerZero-Stargate acquisition proposal was initially announced on August 11, with LayerZero offering to convert all circulating STG tokens into ZRO at a ratio of 1 STG to 0.08634 ZRO, valuing each STG at $0.1675 and ZRO at $1.94 [1]. The acquisition aimed to integrate Stargate more deeply into LayerZero’s ecosystem, dissolve the Stargate DAO, and channel future Stargate revenue into a ZRO buyback program. While the proposal was met with strong social media support, with both ZRO and STG tokens surging by over 20%, the Stargate governance forum reflected significant opposition from community members who believed the offer was too low [1].

The voting process began on August 18, with the initial offer price unchanged and an additional incentive of 50% of Stargate’s next six months of revenue to be shared with veSTG holders [1]. By the time the vote was announced, support had already surpassed 97%, well above the 70% threshold required for passage. The close integration between LayerZero and Stargate, including shared governance and product architecture, made the outcome appear almost predetermined, with LayerZero co-founder Bryan Pellegrino calling it “the highest-turnout vote in Stargate history” [1].

Despite this, Wormhole’s intervention has injected new complexity into the process. Unlike LayerZero, which holds significant influence within Stargate’s governance structure, Wormhole claims it lacks the necessary due diligence on Stargate’s valuation and requires more time to prepare a competitive offer. Wormhole’s strategic timing—intervening after the vote has already seen overwhelming support—suggests it may not be focused on a winning bid but rather on inflaming tensions between Stargate and LayerZero [1].

Analysts have outlined four potential outcomes: (1) a vote suspension enabling competitive bidding with Wormhole emerging as the winner; (2) LayerZero increasing its offer and absorbing additional costs; (3) Stargate proceeding with the original vote despite Wormhole’s challenge; or (4) a vote rerun that could lead to the proposal’s failure [1]. While all scenarios serve Wormhole’s goal of disrupting LayerZero’s plans, the most likely outcomes favor LayerZero, given its entrenched relationship with Stargate and the high current level of support for the acquisition.

Fluid’s COO, DMH, summarized the situation as a strategic move by Wormhole: “Stargate and LayerZero clearly had an agreement before the proposal. Wormhole is furious that LayerZero is buying Singapore with a bag of rice. Therefore, Wormhole is raising the price in an attempt to disrupt LayerZero’s acquisition plan. However, Stargate will eventually be absorbed by LayerZero, and the market is well aware of this, so there won’t be any drama” [1].

As the situation unfolds, the ultimate success of the acquisition appears largely dependent on the response of Stargate’s community and whether the vote remains intact or is delayed for further bidding. Given the current trajectory, LayerZero remains in a strong position, but Wormhole’s interference has introduced an element of unpredictability into what was once seen as a near-certainty [1].

Source: [1] [With Wormhole forcing a price hike, can LayerZero’s acquisition of Stargate still proceed?](https://coinmarketcap.com/community/articles/68ac24daf1c7880937dac3b9/)