Original title: (Wormhole forcibly raises the price and intervenes, can LayerZero's acquisition of Stargate still proceed?)
Original author: Azuma, Odaily Planet Daily
The 'LayerZero acquires Stargate' proposal, which had entered the formal voting process, suddenly changed.
On August 21, LayerZero's direct competitor, the Wormhole Foundation, publicly announced on X that LayerZero's acquisition offer of approximately $110 million for Stargate undervalued Stargate's protocol assets and growth; therefore, Wormhole plans to submit a higher offer and requests a suspension of the current Snapshot vote for 5 working days to refine the bidding process and protect STG holders' interests.
Background summary: LayerZero initiates the acquisition.
The acquisition proposal by LayerZero for Stargate can be traced back to August 11 — Reference reading (LayerZero proposes to acquire Stargate: both tokens surged over 20%, but this group strongly opposes).
In the early hours of that day, the LayerZero Foundation released a draft in Stargate's governance forum, proposing to acquire Stargate for a total price of $110 million.
Specifically, the LayerZero Foundation proposed to exchange all circulating STG (including STG in staking/voting status) at a rate of 1 STG: 0.08634 ZRO for ZRO, at the price of $0.1675 per STG (actually slightly higher than the market price at the time) and $1.94 per ZRO at the time of writing. After the acquisition is completed, Stargate will be more deeply integrated into the LayerZero ecosystem, and the Stargate DAO will be dissolved, with all excess income generated by Stargate in the future used to reduce the circulating supply of ZRO through a repurchase plan.
After the proposal was announced, LayerZero and Stargate's official Twitter accounts frequently interacted, both talking about 'win-win cooperation'; as a result, both ZRO and STG surged on that day, but a closer look at the discussions in Stargate's governance forum shows that the vast majority of Stargate members oppose the acquisition proposal, believing that LayerZero's offer is too undervalued.
Early progress: Voting initiated, large holders crush it.
On August 18, the proposal officially started voting on Snapshot, and STG holders will collectively decide whether to accept the acquisition offer. Compared to the initial proposal, LayerZero did not raise the acquisition offer but claimed that it would share 50% of Stargate's total revenue over the next six months with veSTG holders (i.e., users who directly vote).
After the voting started, it quickly surpassed the minimum vote requirement, with the support rate even surging to over 97% (according to the rules, if it exceeds 70% at the end, it passes). LayerZero co-founder Bryan Pellegrino even proudly talked during a CounterParty podcast: 'This is the vote with the highest participation in Stargate's history.'
Such a lopsided voting pattern is not surprising; although many members of the Stargate community oppose the offer, LayerZero and Stargate, as fully integrated backend protocol and frontend product, are difficult to view as two independent entities, and even half of the Stargate Foundation's board members are from LayerZero... Combined with the interaction language between LayerZero and Stargate, it is easy to imagine that both sides have enough voting power, and to put it simply, this is a vote that 'is bound to pass, but needs a formality.'
Wormhole's ulterior motive: Even if they can't steal it, they have to make you uncomfortable.
Perhaps even LayerZero and Stargate did not expect that Wormhole would intervene at such a critical moment.
As of the time of writing, unlike the 'harmonious scene' where both sides frequently interacted after LayerZero proposed an acquisition, after Wormhole expressed its intention to acquire, Stargate's official Twitter did not post any related updates, and LayerZero only had co-founder Bryan seemingly responding, 'This cannot happen.'
As of the time of writing, Wormhole has not yet made a formal offer, and the reason is quite amusing — Wormhole claims it needs more time to conduct due diligence on Stargate's valuation because they are not as familiar with Stargate as LayerZero, which is familiar enough to hold half of the latter's foundation board seats...
In summary, the further developments of this incident can be classified into four scenarios, and in any case, Wormhole would be pleased.
· The first scenario is that Stargate suspends the vote and enters a bidding war between Wormhole and LayerZero; ultimately, assuming Wormhole wins, it would directly take away the core product of its biggest competitor, thereby capturing more market share.
· The second scenario assumes that LayerZero wins the bidding or LayerZero unilaterally raises the offer and pushes the proposal forward; in this case, LayerZero will pay more funds to STG token holders, while Wormhole contributes nothing but can watch its opponent expend more.
· The third scenario is that Stargate ignores Wormhole's offer on the grounds that the process has already been initiated, and the proposal will continue to move forward in its original state (the current support rate is still very high); in this case, if LayerZero completes the acquisition, STG, which missed out on a higher offer, will inevitably be angry, and Wormhole would love to see a split in LayerZero's community.
· The fourth scenario is that Stargate pushes the vote forward; assuming the proposal ultimately fails due to opposition from the Stargate community (the current support rate is still over 88%, and the likelihood of failure is extremely low), Wormhole successfully obstructs the plan.
In general, I personally lean towards the second and third scenarios, after all, Stargate is the core product of LayerZero, and the latter absolutely does not want to bear the consequences of losing that product.
The COO of Fluid, DMH, succinctly summarized the current situation: 'Clearly, Stargate and LayerZero reached an agreement before the proposal; Wormhole is very upset that LayerZero bought Singapore for a bag of rice; therefore, Wormhole chose to raise the price, attempting to disrupt LayerZero's acquisition plan; but Stargate will ultimately be absorbed by LayerZero, something the market fully understands, so no dramatic situation will arise.'
Wormhole may have known the final outcome was already predetermined before making the offer, but just by speaking, they can make their biggest competitor extremely uncomfortable without any loss on their part; this is truly a top-level scheme.
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