Nikolas Sargeant
The LayerZero Foundation has proposed acquiring cross-chain protocol Stargate for $110 million in an all-token transaction, sparking significant price movements in both projects' native cryptocurrencies while generating mixed reactions from the Stargate community.
The acquisition proposal, outlined in a Sunday forum post, positions the deal as an opportunity to "accelerate both Stargate and LayerZero, giving Stargate the resources to ship on an aggressive roadmap that expands its prerogative outside of bridging."
Under the proposed terms, LayerZero would exchange Stargate Finance (STG) tokens for LayerZero (ZRO) tokens at a conversion rate of 1 STG to 0.08634 ZRO. This reunion would bring Stargate back under LayerZero's direct control, as the bridging protocol was originally developed and launched by LayerZero in 2022.
Stargate operates as a cross-chain bridge solution, enabling users to transfer digital assets between different blockchains through liquidity pools. The platform positions itself as offering native asset transfers without relying on traditional blockchain bridges, which have historically been vulnerable to security exploits.
Token Markets React Positively to Merger News
Both cryptocurrencies experienced substantial price increases following the acquisition announcement, ranking among the day's top performers in the broader crypto market.
LayerZero's ZRO token surged over 23% in the 24 hours following the proposal, reaching $2.44 according to CoinGecko data. Similarly, Stargate's STG token gained approximately 16.5% during the same period, climbing to just over 19 cents and extending its recent weekly rally.
Despite these gains, both tokens remain significantly below their historical peaks. ZRO has declined 67% from its December high of $7.47, while STG has fallen over 95% from its mid-2022 peak of $4.14, reflecting broader challenges in the decentralized finance sector.
Leadership Emphasizes Unified Development Strategy
LayerZero co-founder and CEO Bryan Pellegrino advocated for the merger on social media, emphasizing speed and efficiency benefits. "I want to move faster, ship faster," Pellegrino stated, arguing the proposal would help Stargate execute its ambitious development roadmap while creating unified infrastructure for ecosystem integration.
Pellegrino highlighted several potential advantages, including providing STG holders with "a more liquid token" and offering the Stargate community "a clear path forward with significantly more resources and a single unified direction."
Community Pushback Challenges Acquisition Terms
Despite management enthusiasm, the proposal has encountered substantial resistance from STG tokenholders, who argue the offered exchange rate undervalues Stargate's contribution and eliminates important token utility features.
Community members expressed concerns about losing Stargate's revenue-sharing mechanism, which is unavailable on ZRO tokens. "The offers are not attractive at all. They do not offer any advantages to STG holders," one user commented, arguing that LayerZero "needs to raise its offer significantly."
Several community members suggested alternative terms, including a 1:1 token swap ratio, citing "the amount of revenue Stargate makes and the potential for the protocol." Others noted that while consolidating two tokens makes operational sense, the current proposal eliminates staking rewards for STG holders.
The proposal will remain open for community feedback for seven days before Stargate's decentralized autonomous organization votes on the acquisition terms.
