- The LayerZero Foundation has proposed a US$110 million acquisition of Stargate Bridge which would see the bridge’s STG token discontinued and its DAO dissolved entirely.
- If passed by a vote of STG token holders, the deal would see governance of Stargate Bridge moved into the hands of the LayerZero Foundation, away from the community-controlled DAO.
- It’s proposed that STG token holders would be able to swap their STG tokens to LayerZero’s ZRO token at a rate of 1 STG : 0.08634 ZRO.
In a deal valued at US$110 million (AU$168m), the LayerZero Foundation — the organisation that supports the development of the cross-chain interoperability protocol, LayerZero — has proposed acquiring Stargate Bridge, including all of its STG tokens.
The acquisition would see ownership and governance of Stargate Bridge change hands from STG token holders to the Layer Zero Foundation, with the Stargate Bridge decentralised autonomous organisation (DAO) being dissolved entirely.
This offer is designed to accelerate both Stargate and LayerZero, giving Stargate the resources to ship on an aggressive roadmap that expands its prerogative outside of bridging, while tying an incredible, revenue-generating protocol that touches the end-consumer deeper into the LayerZero ecosystem.
LayerZero Foundation proposalIf accepted in a vote of STG token holders, the proposal would see the STG token wound up. Current holders would be able to swap their tokens for LayerZero’s native token ZRO at a rate of 1 STG to 0.08634 ZRO, reflecting a value of US$0.1675 per STG and US$1.94 per ZRO.
Stargate Bridge was developed by LayerZero Labs and launched on LayerZero in March 2022. Shortly after its launch, Stargate Bridge’s STG token achieved its all-time high price, hitting US$4.14 in early April 2022, according to data from CoinGecko.
The proposal would also see “all future excess revenue” generated by Stargate Bridge funnelled into a buyback program for ZRO, intended to reduce the token’s circulating supply and support its price.
The proposal is currently in a 10-day discussion period, after which token holders will vote — the vote must meet a 70% approval threshold to pass.
Posting on X / Twitter, LayerZero Labs co-founder and CEO Bryan Pellegrino said having Stargate Bridge under the control of the DAO is slowing progress and hobbling the ecosystem.
Every day small micro decisions of do we do it ourselves, send them to Stargate, who writes the code. All of this is overhead. All of this is slow.
Bryan Pellegrino, LayerZero Labs CEOHe explained, “we want to move faster, ship faster, help Stargate execute on it’s ambitious roadmap while creating a single stack that anybody integrating within the @LayerZero_Core ecosystem can adopt.”
Since 2022, the STG token has plummeted in price and is currently down over 95% from its all-time high, sitting at just US$0.1677. This price collapse comes despite widespread use of the bridge for cross-chain swaps, with historical volume over US$70 billion (AU$107b). In its proposal, the LayerZero Foundation described the chain as “still the most used bridge in the industry today.”
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Token Holders Question Fairness of Proposal
There has been some pushback on the proposed acquisition from the Stargate Bridge community, with several questioning whether there’s any real value in it for STG token holders.
“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,” wrote one user named ahmetgumustekin.
Another user, Vladtheinhaler, wrote that the proposal valued STG tokens far too low:
“The $STG token has been as high as $4 in previous cycles. Given the amount of revenue Stargate makes and the potential for the protocol, this offer should be significantly higher. I suggest that the historic price of STG be taken into account and that each STG token be redeemable at a 1:1 conversion rate to ZRO.”
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Others offered some support for the concept behind the acquisition, with a user named Paul_langford posting that he thinks “the objective here is spot on. It makes sense to create a singular focus around one token that everyone can rally around, and I think this is massively bullish for ZRO.” However, even this supportive user questioned the fairness of the proposal saying, “I agree with others feedback here: STG is undervalued and veSTG is massively undervalued.”
Based on this early sampling of community feedback, it looks like the proposal may struggle to get the 70% support from token holders it needs to get over the line.
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