LayerZero wins $110M Stargate acquisition deal

Blockchain messaging protocol LayerZero has secured the $110 million acquisition of cross-chain platform Stargate after a heated, last-minute bidding war.

With one of the highest participation rates in its history, the Stargate (STG) DAO approved the acquisition on with a 95% majority vote. Over 7.5 million veSTG tokens were cast by more than 15,000 addresses. As part of the agreement, the DAO was shut down, and governance will be moved to the LayerZero (ZRO) ecosystem.

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Stargate to shift to LayerZero control

Under the final agreement, Stargate stakers will receive 50% of protocol revenue for the next six months. The remaining 50% will be allocated toward LayerZero’s ZRO token buybacks, which will strengthen token value. Additionally, holders of STG tokens will be able to convert them into ZRO at a fixed exchange rate of 1 STG = 0.08634 ZRO, starting Monday, Aug. 25.

This is a structural change that aligns Stargate’s cross-chain liquidity infrastructure with LayerZero’s wider interoperability strategy as governance and operations move under the LayerZero umbrella.

Rival bids fail to sway Stargate vote

Gaining approval wasn’t an easy process. Because it terminated Stargate’s staking program and allegedly undervalued its strong revenue generation, LayerZero’s original proposal drew criticism from the community. Rivals were able to take advantage of this discontent, which led to a rare multi-protocol bidding war in decentralized finance.

Wormhole (W), Axelar (AXL), and Across Protocol joined the battle immediately, with Wormhole even offering an all-cash bid of $120 million with accelerated payouts for holders of Stargate tokens. Despite the higher offer, Stargate’s community ultimately stuck with LayerZero, emphasizing strategic alignment over short-term gains.

Before being spun out as a DAO in 2022, LayerZero Labs initially incubated Stargate in 2021. LayerZero’s reacquisition of Stargate solidifies its ecosystem and improves its standing in the cross-chain messaging and liquidity space in a time when interoperability is still a major DeFi bottleneck,

Now that the acquisition is complete, focus is on how LayerZero will incorporate Stargate’s infrastructure and whether the move will provide long-term benefits to both ZRO holders and Stargate’s loyal supporters.