You are missing one of the most significant acquisitions in the history of DeFi

LayerZero's plan to acquire Stargate has sparked heated discussions in the community. This article will delve into its pros and cons, analyze who will be the biggest beneficiary, and dissect the concerns and compromises behind the proposal. This article is based on a piece written by mattdotfi and compiled, translated, and authored by AididiaoJP and Foresight News. (Background: LayerZero announces a $127 million acquisition of Stargate, STG and ZRO soar 25%, raising concerns about centralization in the community) (Supplementary background: Key governance referendum for LayerZero: Should the ZRO protocol fees be opened?) Who will benefit the most? Currently, only a few people have noticed @LayerZero_Core's acquisition of @StargateFinance, but since such mergers are extremely rare, I believe it is worth exploring in depth. Proposal Summary LayerZero plans to acquire the tokens and treasury of Stargate (at the current ratio, each $STG is supported by $0.1444 in funds) and terminate the Stargate DAO, merging it into an economic system led by $ZRO. Acquisition price: each $STG is priced at $0.1675, or 0.08634 $STG for each 1 $ZRO. The proposal will follow the standard process of the Stargate DAO, requiring at least 1.2 million votes and a support rate of 70% to pass. Future excess income generated by Stargate will be used to reduce the circulation of $ZRO through buybacks. Pros and Cons Analysis This raises a key question: "Who will benefit the most?" Under the current circumstances, LayerZero and $ZRO holders seem to be the biggest beneficiaries, as this is a liquidity acquisition conducted through their tokens, specifically manifested as: Acquiring $STG supported by the treasury of Stargate at a moderate premium of 16%, while increasing the number of $ZRO holders. Earning fees generated by the protocol (according to @DefiLlama data, approximately $1.74 million annually), which will be used to buy back $ZRO in the open market. Vertically integrating the $ZRO token economy with cross-chain business through buybacks (LayerZero is in a leading position) and enhancing its utility. What do $STG and $veSTG (locked STG) holders get? Not much: Due to the recent price increase of $ZRO, the exchange discount is relatively low; $STG only has a slight premium due to market volatility, but the price floor is clear. After an initial 24-hour discussion, LayerZero decided to pay $veSTG holders six months of Stargate income, as they could not unlock their tokens before the lock-up period ended. Disadvantages and Concerns The issues here are complex, but ultimately boil down to one word: compromise. LayerZero profits more under the current situation, while Stargate token holders find it difficult to be satisfied. Here are three major issues and uncertainties: How should a reasonable premium for LayerZero's acquisition of $STG be calculated? For $STG holders, how should they choose between "the lesser of two evils"? Should they continue to bear the continuous sell pressure on the token, or choose a safe option with limited upside? The average lock-up period for $veSTG holders is about a year, and if the proposal passes, they will only receive six months of compensation—what is their incentive? Currently, the fully diluted valuation (FDV) of $STG is less than 10% of $ZRO, while $STG worth $8.1 million is locked in the form of $veSTG. Many holders are requesting a 1:1 exchange of $ZRO and $STG, but this is unreasonable, as it would mean they instantly gain 12 times the return, while LayerZero would need to use the entire FDV to acquire a stable treasury business with limited income. Personal Opinion Although I believe the LayerZero team should reassess the premium paid to $STG holders and design a more reasonable revenue-sharing plan for stakers, this acquisition may not be a disaster for the project itself. The DAO primarily relies on revenue and token issuance to maintain operations, and $STG has plummeted more than 95% from its historical high, with Stargate's annual revenue only at $2 million, leaving little room for expansion. Moreover, Stargate already relies on LayerZero's infrastructure, and integration will make it easier to leverage its technological stack and capital for growth. Nevertheless, I believe the proposal is meaningful for Stargate, but there is no need to rush to conclusions. The retention and loyalty of $STG holders to LayerZero largely depend on how the team handles this matter. Otherwise, they may lose a batch of potential new loyal $ZRO holders and participants who supported Stargate from the very beginning. Update: The proposal has gone live on the Stargate DAO, with the minimum threshold reached; currently, 2.3 million circulating $veSTG (a total of 17 million) have voted "in favor" (98% to 2% "against"). I do not believe this is a hostile takeover, but at this stage, LayerZero's benefits clearly far exceed those of $STG and $veSTG holders. Related Reports "You are missing one of the most significant acquisitions in the history of DeFi" This article was first published on BlockTempo (the most influential blockchain news media).