The LayerZero Foundation, the organization supporting the LayerZero cross-chain communication system, has proposed an acquisition of Stargate, a prominent crypto protocol, for $110 million. News of the potential deal has caused a surge in the value of the tokens associated with both projects.
Details of the proposed acquisition were shared on Stargate’s community forum on Sunday. LayerZero characterized the offer as a strategy to rapidly advance both Stargate and LayerZero. The aim is to provide Stargate with the necessary resources to execute an ambitious development plan, expanding its focus beyond simply bridging blockchains.
The proposed agreement involves exchanging Stargate Finance’s token (STG) for LayerZero’s own token (ZRO). The conversion rate is set at 1 STG equaling 0.08634 ZRO.
LayerZero originally developed and launched Stargate in 2022. If Stargate’s community approves the acquisition, the platform will essentially return to being under LayerZero’s control.
Stargate facilitates the transfer of crypto assets across different blockchains. It utilizes liquidity pools to enable “native” asset transfers, which Stargate claims are more secure than traditional blockchain bridges, which have been vulnerable to attacks in the past.
STG and ZRO Tokens See Price Increases Following Acquisition Plan
News of LayerZero’s acquisition proposal triggered significant gains in the value of both STG and ZRO tokens.
According to data from CoinGecko, LayerZero’s ZRO token jumped over 23% in the last 24 hours, reaching $2.44 and becoming one of the top-performing cryptocurrencies in the market.
Stargate’s STG token also experienced a notable rise, increasing by approximately 16.5% to trade at just above $0.19, further extending its gains from the previous week.
While both tokens have seen recent increases, they remain significantly below their all-time high values. ZRO is currently 67% lower than its December peak of $7.47, and STG is down over 95% from its peak of $4.14 in mid-2022.
LayerZero CEO Emphasizes Benefits of “Unified Direction”
Bryan Pellegrino, co-founder and CEO of LayerZero, expressed his desire “to move faster, ship faster” in a post on X (formerly Twitter).
He stated that the proposed acquisition will “help Stargate execute on its ambitious roadmap while creating a single stack that anybody integrating within the [LayerZero] ecosystem can adopt.”
Pellegrino added that the deal would provide STG holders with “a more liquid token” and offer the Stargate community “a clear path forward with significantly more resources and a single unified direction.”
STG Token Holders Express Concerns about the Proposed Deal
Despite the potential benefits outlined by LayerZero, the acquisition proposal has received generally negative feedback from Stargate token holders. Many acknowledge the rationale behind a token swap, but perceive the current offer as unfair and express concern that it will eliminate the ability to stake their tokens.
One Stargate user commented, “The offers are not attractive at all. They do not offer any advantages to STG holders, and STG’s revenue-sharing system is not available on ZRO. We will only be able to hold on to our tokens.”
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Another commentator suggested that LayerZero “needs to raise its offer significantly.” Others described the offer as “fundamentally flawed” and agreed on the need for a higher offer, potentially a 1:1 token swap, given “the amount of revenue Stargate makes and the potential for the protocol.”
A different user acknowledged the benefits of the swap, stating that “managing two tokens is a pain and causes more distractions than necessary.” Yet another agreed that it “makes sense to merge” the tokens but shared concerns about the unfairness of the deal, particularly the loss of staking rewards for STG holders.
Stargate announced that the proposal will be open for public comment for the next week. Following this period, the platform’s decentralized autonomous organization (DAO), which comprises STG token holders, will vote on whether or not to approve the acquisition.
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