Crypto Bridge Wars: Wormhole vs LayerZero Battle for $110M Stargate Deal

TLDR

• Wormhole is challenging LayerZero’s $110 million bid to acquire Stargate, arguing the offer undervalues the platform
• LayerZero updated its proposal on Sunday to include revenue-sharing for staked token holders, gaining 88.6% community support
• Wormhole has requested a five-day pause in voting to prepare a “meaningfully higher bid” for Stargate
• Stargate generated nearly $1 million in revenue over three months and holds $92 million in treasury assets
• All three tokens (W, STG, ZRO) saw gains following Wormhole’s counter-bid announcement

Wormhole Foundation has emerged as a rival bidder in the proposed acquisition of cross-chain bridge Stargate. The move sets up a potential bidding war for the platform originally developed by LayerZero.

LayerZero initially proposed acquiring Stargate for $110 million earlier this month. The offer would merge Stargate into LayerZero’s technology stack and convert all STG tokens to ZRO tokens at a ratio of 1 STG per 0.08634 ZRO.

The original proposal faced criticism from Stargate token holders who viewed the terms as unfavorable. LayerZero responded by updating its offer on Sunday to include revenue-sharing provisions for staked token holders.

Under LayerZero’s revised proposal, staked Stargate token holders would receive half of all Stargate revenue for six months. The remaining revenue would fund ZRO token buybacks.

The updated terms have gained traction within the Stargate community. Current voting shows 88.6% support from STG holders, representing 6.6 million tokens.

Wormhole Argues for Higher Valuation

Wormhole contests that LayerZero’s bid undervalues Stargate’s worth. The foundation points to Stargate’s revenue generation and substantial treasury holdings as justification for a higher price.

Stargate generated nearly $1 million in revenue over the past three months. The platform also maintains a treasury containing $92 million in stablecoins and ether, plus additional STG token holdings.

Wormhole has requested access to Stargate’s financial records, user metrics, and legal status. The foundation wants five business days to finalize what it describes as a “meaningfully higher bid.”

The voting period on LayerZero’s proposal was scheduled to close on August 24. Wormhole is asking for this timeline to be extended to allow for competitive bidding.

Market Response and Token Performance

The acquisition battle has boosted token prices across all three platforms. Wormhole’s W token jumped 6.3% in 24 hours following the counter-bid announcement.

Stargate’s STG token gained 6% on the day, reaching a 24-hour high above 18 cents. LayerZero’s ZRO token also rose 3.6% to around $2.

Both Stargate and LayerZero share common origins, with the same development team creating both protocols. LayerZero cofounders were also involved in launching Stargate Finance.

Stargate operates as a decentralized bridge enabling cross-chain transfers of assets like USDC, USDT, ETH, and BTC across more than 80 blockchains. The platform processed $4 billion in bridging volumes during July alone.

Wormhole operates a competing cross-chain bridge using different technology mechanisms. The foundation argues that acquiring Stargate would create a “market-dominant ecosystem” combining Stargate’s liquidity pools with Wormhole’s blockchain integrations.

The voting period remains active as both companies prepare their final offers. Industry observers have noted this could mark the beginning of increased merger and acquisition activity in the cross-chain protocol sector.

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