LayerZero Beats Wormhole in $110M Stargate Acquisition Battle

TLDR

• LayerZero Foundation won a bidding war to acquire cross-chain protocol Stargate for $110 million
• Stargate’s community voted 95% in favor of the acquisition despite rival offers from Wormhole, Axelar, and Across
• Wormhole made a competing $120 million cash offer but requested the vote be paused, which was denied
• LayerZero modified its original proposal to give STG token holders 50% of Stargate’s revenue for six months
• All circulating STG tokens will be swapped for ZRO tokens at a 1:0.08634 ratio

LayerZero Foundation has successfully acquired cross-chain protocol Stargate for $110 million after winning a competitive bidding process. The deal marks one of the largest decentralized autonomous organization acquisitions in crypto history.

Stargate’s community voted overwhelmingly in favor of the acquisition on Sunday, with 95% approval from over 15,000 participating addresses. The vote represented 7.2 million STG tokens supporting the deal versus 399,400 tokens opposing it.

LayerZero originally developed and launched Stargate in 2022, making this acquisition a homecoming for the protocol. Stargate operates as a cross-chain bridge that uses liquidity pools to transfer assets between blockchains without relying on traditional bridge infrastructure.

The acquisition process became competitive in the final days as rival protocols submitted last-minute bids. Wormhole Foundation made a $120 million all-cash counter-offer on Saturday, requesting a five-day pause to the ongoing vote.

Competition Heats Up

Wormhole’s proposal included immediate payment of three times the projected revenue for six months to STG stakers. The company had previously criticized LayerZero’s initial offer as undervaluing Stargate’s business.

Cross-chain protocols Axelar Network and Across Protocol also expressed interest in bidding. Across co-founder Hart Lambur stated he would participate if the process was slowed down for proper consideration of all offers.

Axelar Foundation similarly requested a competitive bidding process, saying it had strong interest in preparing a comprehensive proposal. Both companies acknowledged they needed more time to formulate proper bids.

Deal Structure Modified

LayerZero modified its original proposal following community pushback about unfair terms for STG holders. The revised offer provides STG stakers with 50% of Stargate’s top-line revenue for six months after the vote.

The remaining 50% of revenue, plus future excess revenue, will fund ZRO token buybacks and burns. This change addressed concerns that the initial proposal primarily benefited LayerZero token holders.

Under the approved terms, all circulating STG tokens will convert to ZRO tokens at a fixed ratio. Each STG token exchanges for 0.08634 ZRO tokens, valuing the deal at approximately $120 million at current prices.

LayerZero CEO Bryan Pellegrino highlighted the vote’s record participation levels. He noted that 95% of both stake weight and individual addresses voted in favor of the acquisition.

The deal dissolves Stargate’s DAO structure and brings the protocol back under LayerZero’s direct control. LayerZero describes Stargate as the most widely used bridge in crypto, providing immediate revenue generation and consumer access.

Despite requests from competing bidders, Stargate Foundation lead Angus Lamps confirmed the vote could not be paused. The foundation had been engaging with interested parties who signed non-disclosure agreements for due diligence purposes.

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