- Stargate token holders have rejected a takeover offer from the LayerZero Foundation.
- The proposal would merge Stargate and LayerZero under a single token but dissolve Stargate’s DAO.
- Token holders argue the offer undervalues Stargate and mainly benefits LayerZero.
- The plan would convert existing STG tokens to ZRO, changing how bridge fees are distributed.
- Community feedback calls for revisions, and the merger process remains uncertain.
LayerZero Foundation has proposed acquiring the Stargate crypto bridge, aiming to bring both protocols under one token and dissolve Stargate’s decentralized autonomous organization (DAO). The move was announced Sunday and comes as the nonprofit seeks to unite both projects for improved efficiency.
The proposal would see Stargate’s STG token holders swap their tokens for LayerZero’s ZRO token. According to Bryan Pellegrino, CEO of LayerZero Labs, the deal is valued at about $138 million in ZRO tokens. Following the announcement, both tokens saw price jumps—over 20% for STG and ZRO.
Many STG holders have spoken out against the deal, calling it “fundamentally flawed” and “inadequate” on the project’s governance forum. One token holder wrote that the proposal “undervalues Stargate’s assets and potential while disproportionately benefiting LayerZero at the expense of existing stakeholders.”
The current setup gives STG token holders 50% of all fees generated by Stargate’s crypto bridge. Stargate is projected to earn over \$1.4 million in annual revenue. Under the new plan, those fees would instead be used to buy back ZRO tokens. Critics say this would dilute the value for STG holders and transfer benefits to the LayerZero ecosystem without clear returns for them.
Stargate allows DeFi users to move crypto between different blockchains, while LayerZero provides messaging technology for blockchain communication. Both projects were developed by LayerZero Labs, but Stargate launched independently in 2022 with its own token. Two years later, LayerZero released its ZRO token, leading to questions about the need for both tokens.
While some community members believe the merger could strengthen both projects, opposition remains. One governance participant, Exahash, stated the proposal does not meet the DAO’s process requirements and advised a revised offer should be presented for further review.
ZRO’s market cap stands at $258 million, while STG is valued at $179 million, according to CoinGecko. ZRO is currently down 67% from its high this year, and STG has lost 95% of its value since launching in 2022.
It is not clear if the proposed acquisition will move forward in its current form, as community feedback continues to shape the process. LayerZero Foundation has yet to respond publicly to requests for comment.
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