The LayerZero Foundation, which backs the cross-blockchain messaging protocol LayerZero, has put forward a proposal to acquire the crypto protocol Stargate for $110 million, which has boosted the tokens tied to both projects.
LayerZero laid out the plan in a post to Stargate’s forum on Sunday, pitching the offer as “designed to accelerate both Stargate and LayerZero, giving Stargate the resources to ship on an aggressive roadmap that expands its prerogative outside of bridging.”
LayerZero would swap the platform’s token, Stargate Finance (STG), for its self-titled token LayerZero (ZRO) at a rate of 1 STG to 0.08634 ZRO, it explained.
Stargate was developed and launched by LayerZero in 2022, and the deal — if approved by Stargate’s community — would see the platform come back under its umbrella.
Stargate allows users to transfer digital assets across blockchains using liquidity pools, which the platform pitches as allowing assets to be transferred natively instead of relying on blockchain bridges — which have a history of being hacked.
STG, ZRO tokens rise on plan
The tokens tied to the platforms both gained double-digit percentage points on the day on LayerZero’s proposal.
LayerZero’s token has gained over 23% in the past 24 hours to trade at $2.44, making it one of the biggest gainers in the crypto market in the past day, per CoinGecko.
Stargate’s token, meanwhile, saw 24-hour gains of around 16.5% to just over 19 cents, extending its rally over the past week.
Both tokens are down significantly from their peaks, with ZRO down 67% from its December high of $7.47, while STG has fallen over 95% from its mid-2022 peak of $4.14.
LayerZero boss hails plan as “unified direction”
LayerZero co-founder and CEO Bryan Pellegrino posted on X that he wants “to move faster, ship faster.”
He said the proposal would “help Stargate execute on its ambitious roadmap while creating a single stack that anybody integrating within the [LayerZero] ecosystem can adopt.”
He added it would also give STG holders “a more liquid token” and would give the Stargate community “a clear path forward with significantly more resources and a single unified direction.”
STG tokenholders say plan “not attractive at all”
However, the deal saw generally negative feedback from holders of Stargate’s token, with some saying they understand the need for a swap, but the deal pitched is unfair and won’t allow for staking.
“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,” one Stargate user wrote.
The user added that LayerZero “needs to raise its offer significantly,” while others said the offer was “fundamentally flawed” and agreed the offer should be higher, possibly a 1:1 token swap, due to “the amount of revenue Stargate makes and the potential for the protocol.”
Another user said they saw the need for the swap as “managing two tokens is a pain and causes more distractions than necessary,” while another said it “makes sense to merge” the tokens, but agreed the deal was unfair as it meant STG holders would no longer be able to stake their tokens for rewards.
Stargate said the proposal will be available for comment for the next seven days. The platform’s decentralized autonomous organization, made up of tokenholders, is then set to vote on the deal.
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