LayerZero Foundation acquisition of Stargate (STG)

General
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3 full years after launching, Stargate is still the most used bridge in the industry today.

It’s done $70B+ in volume.

It’s the home of every major OFT.

It has made bootstrapping liquidity to any new chain trivially easy with Hydra.

And yet there is still so much more it could do.

We want to add a huge dose of fuel to the fire that Stargate has been burning – Which is why we are proposing an $110M acquisition of the Stargate token.

Proposal: Acquisition of the Stargate token

As of July 2025, Stargate has a backing of $0.14444 per circulating token

It currently trades at $0.1637 per token.

We are offering $0.1675 per token.

Mechanically, what this will look like:

  • All circulating STG (including staked/voting STG) is swapped for ZRO at a ratio of 1 STG : 0.08634 ZRO reflecting a value of $0.1675 per STG and $1.94 per ZRO.

  • Stargate will become even more deeply ingrained in the LayerZero ecosystem, building a suite of consumer-facing offerings that may expand on its core in many new ways.

  • The dissolution of the Stargate DAO

  • All future excess revenue generated by Stargate will be directed towards reducing the circulating supply of ZRO via a buyback program

Governance & Implementation

This proposal requires a governance vote from STG token holders under the existing Stargate Finance DAO rules.

Key steps:

  1. Discussion Period: The proposal is now introduced in the Stargate community forum for discussion. STG holders are encouraged to ask questions for the next seven days.

  2. Voting: After the discussion period, the proposal will move to Snapshot for three days. STG holders will vote For or Against the offer from the LayerZero Foundation. Quorum is 1.2M veSTG and approval threshold must meet 70% for the vote to pass.

  3. Execution: If approved, STG holders will be informed of how to swap for ZRO. LayerZero Foundation will assume ownership and operation of all Stargate Finance duties. Stargate will continue without interruption; users of the Stargate bridge will not experience any downtime or changes in functionality during the transition.

  4. Redemption: If the proposal is approved, STG will cease to have any role in the operations of Stargate Finance. Each STG token will become redeemable for 0.08634 ZRO through a fixed-rate redemption contract, based on ZRO’s market price of $1.94 at the time of proposal. The swap contract will remain open indefinitely. Should there ever be a need to close this contract in the future, advance notice will be provided.

Conclusion

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. If this proposal passes, Stargate will have a more dedicated set of technical resources to ship and move faster than ever before.

A single token, single direction, single focus, and a broader mandate.

Tldr; We want to move faster, ship incredible product and win. Let’s bring the bridge home.

    - LayerZero Foundation
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After the past 24 hours of reading questions, concerns, criticisms; We’re writing this to address some of the largest questions and clear up the many misconceptions in both this offer and the state of Stargate.

I want to start by stating that I am a very strong believer in open markets and while most view DAO governance skeptically I strongly believe in an open and fair process and think every voter should make the decision that aligns best with their own economic interests. I will also state formally and for the record that despite significant ownership of STG, all LayerZero Labs and Foundation members have been expressly forbidden from voting on this proposal. We have also not rallied to individual or large holders to take a specific position. As any of the large stakeholders in the DAO who have reached out to me since this went up know, I have told each of them to vote in their own interests, have explained why I think this is clearly the best long term outcome for Stargate and LayerZero and not explicitly encouraged or pressured them to vote in any specific way. All of the information should be as open as possible, and everyone who has a strong opinion should stake their veSTG and vote.

I think it’s important to state. We are not here to take. We are here to give.

This acquisition expands Stargate’s fee capture across all LayerZero messaging volume ($22B in Q2 alone) – Every major stablecoin issuer, every tokenized asset, every cross-chain application will need what we’re building together. The question isn’t whether this future exists—it’s whether we’ll build it together or watch others attempt it separately.

We have an incredibly aggressive development roadmap with all of the resources to execute on it. Proven by all of the whitepapers and technical innovation we’ve historically delivered on both for LayerZero and Stargate and this year alone, where we have dominated we have not rested on our laurels and expanded with new research that opens up new markets that others haven’t been looking at.

Updated Terms to Better Reward veSTG Stakers

As for the deal structure: in all of the comments so far, I do think the most valid criticism is that veSTG and STG being treated equally is inherently unfair to veSTG stakers – the people who took a large leap of faith with the protocol, locking up for many years.

We will amend our proposal to distribute the next 6 months of Stargate revenue to pass through to veSTG stakers at the same ratio it is currently passing through at. This applies to all veSTG stakers who were staked at the time the proposal was posted.

Conclusion

We love the Stargate protocol, naturally, and it’s very dear to our hearts but it has struggled to get the market dominance it should have even with all of the time/resources/innovation that LayerZero Labs has provided it for free. We think Stargate should be far and away one of the most used protocols within crypto.

This offer comes after we received news of Stargate restructuring and reducing team’s operational capacity and bandwidth

We have all of the resources and expertise and more than ever we want to see products powered by LayerZero in the limelight and winning.

We care about winning and we want to see Stargate win. Our goal is that we are no longer building things that are potentially competitive, no longer having to decide between doing something that’s good for LayerZero or good for Stargate, and we want people to have a single place to look for everything within this ecosystem – ZRO.

We’re on the launchpad fuelling the rocket, we want Stargate onboard with us.

This is an invitation to join the most consequential infrastructure project in crypto history.

together we can achieve what neither could alone

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Below is a summary of the Community Call held on Tuesday 12th August.

LayerZero x Stargate Community Call – 2025-08-12

Topic: Proposed LZ–STG acquisition terms, pricing rationale, revenue sharing, and post-merger plans.

Q: How was the price ratio for the deal determined?

Bryan:
We looked at the STG treasury backing and current market price, and proceeded to set a premium on top of that. With that in mind, we thought, “What’s the most we’re willing to pay for this deal?” and proposed that number. We also considered that veSTG holders have tokens locked for years, and have factored that into our revised proposal.

Q: Why differentiate between veSTG and liquid STG holders?

Bryan:
We heard the feedback that treating locked veSTG holders as liquid holders who bought after the announcement may have been of concern. Therefore, with the updated proposal, veSTG holders receive six months of revenue sharing.

Q: Will there be revenue growth during those six months?

Bryan:

Yes. Our goal is significant growth through:

  1. Stronger monetization focus.

  2. New products (e.g., stablecoin hubs, OFT hubs).

  3. Faster shipping with combined teams.

    1. We can execute immediately because we already know the tech stack and partners.

    2. Expect 4–8 weeks to align teams and roll out deals, not 6–8 months.

Q: Why merge now? Couldn’t this have been foreseen earlier?

Lamps:
The industry is shifting rapidly. Stablecoins are reaching product-market fit. Institutions are more comfortable working with LayerZero than with a DAO/Foundation structure.

Bryan:
Originally, Stargate was designed to be independent and immutable. V1’s growth stalled; V2 revived it. But Stargate needs more to stay in front. Without unifying as an organisation, we risk building overlapping products that could cannibalize each other. The merger avoids this and fully aligns resources.

Q: How will the Stargate Foundation budget and costs change?

Lamps:
Past budget went to team salaries, protocol operations, audits, legal, and some marketing. To maintain market share and innovate, a larger team and more funding are required. A rejection of this proposal will lead to a larger budget required for the next 12 months as we would not be able to rely as much on LayerZero resources.

**Q: What exactly is the six-month revenue sharing plan?
**
Context: The new proposal introduces a 6 month revenue sharing plan, so all veSTG holders at the time of the proposal can continue receiving STG staking revenue share.

Bryan:

  • veSTG holders will receive 50% of all top-line protocol revenue (same as today) for six months post-merger.

  • Applies to all products and new revenue streams.

  • The remaining 50% will be used to buy back ZRO.

  • After six months, 100% of excess revenue (net after costs) goes to ZRO buybacks.

Q: Where will the ZRO for the deal come from?

Bryan:
From the LayerZero Foundation. Details will come from their side later.

Q: Why trade STG for ZRO when ZRO has unlocks and no buybacks yet?

Bryan:
Without the merger, Stargate risks slower growth or decline due to limited resources and competing product development. The offer includes a premium, six months of revenue sharing, and integration into the LayerZero ecosystem—positioning for faster growth.

Closing Remarks (Henry):
The merger addresses past resource and attention gaps. It unifies two communities under one asset, enabling faster innovation and positioning to build critical infrastructure for how value moves onchain.

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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.

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This seems like a well-thought-out proposal and looks like a step in the right direction. My theory is that bridges in themselves are almost no revenue-making machines, as the competitive landscape has evolved and a bridge having an independent token does more harm than good. For a bridge to be a well oiled machinery it should be supported and funded by a bigger entity that can be a cross-chain message protocol or a Layer-1 which wants to bring better liquidity and users to their ecosystem.

With the dissolution of STG token – I beleive the team would be able to lock-in and focus on what really matters. Managing two tokens is a pain and causes more distractions than necessarry.

I fully support the proposal and I beleive the STG holders will capture more upside in ZRO than they could potentially capture in STG because of the infirmness of the bridge as a business model.

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I’m yet to see the direct benefits to stg holders/stakers.

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I think stakers should be compensated differently from this. Generally it makes sense to merge these two coins, but it does not take into consideration the staking mechanism and the risk that stakers undertake by fixating their STG tokens for years.

In current form, me as a heavy staker, I vote against.
Afterall, stakers are the voters so it should be considered well.

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I think LayerZero needs to raise its offer significantly. It’s not a profitable offer for STG holders.

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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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You know, a long time ago, I bought STG tokens hoping for some “usefulness” in the future… But all I got was a role in the discord, and the opportunity to watch the investment amount rapidly approach zero.

P.S. // OFFTOP //

By the way… about half a year ago old users could get merch and I was among them, but because of the “complexity” of logistics, they couldn’t or didn’t want to send the parcel, but the moderator “havds” told me not to be upset and that they would DEFINITELY come up with another way to thank me for many years of support)… Now three months of deathly silence have passed … So … Do what you want. :waving_hand:

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If this acquisition goes through:
LayerZero will have acquired this for almost nothing.

Stargate FDN will no longer have to pay bridge revenues to its stakers, and this money will remain with FDN. According to the latest reports, this amounts to $939k over three months.

Current ZRO holders will be able to sell their ZRO at a higher price through buybacks made by Stargate from the revenue generated here.

STG holders, on the other hand, will exchange their tokens for ZRO at a very low price and will have to hold ZRO directly without receiving stake income.

The only losers here are STG holders. Therefore, LayerZero should either significantly increase its offer or this sale should not proceed.

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absolutely disgusting for all the stargate hodlers and especially the lockers! After years we had a good way to reward the supporters via the 50/50 fee split and now those people will get massively diluted and generally robbed, bc we now have a 500M token and 2B fdv what will dilute any form of buy backs and mostly help team and vcs because of different emmission schedules???

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imho u could convert the tokes 1:1 on the stated market price but u need to compensate all the lockers differently bc they get diluted and there must be a premium paid to the lockers

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Hi, Paul here.

I am a huge fan of Stargate, a significant holder of STG, and highly active with the DAO. I am also a huge fan of LayerZero, and care deeply for its long term success.

I think 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. That being said, I agree with others feedback here: STG is undervalued and veSTG is massively undervalued.

For those of us who’ve chosen to stake STG tokens for years, we do so because we believe in the mission of STG. There is also an economic dimensions: we share in the fees earned by Stargate.

The current proposal treats liquid STG and veSTG the same when they are anything but. veSTG should receive a significant premium based on their staking period, and overall amount of STG staked.

I kindly ask that the LayerZero foundation reconsider the overall economic structure here for both liquid STG holders, and even more so for veSTG holders.

Thank you for your attention to this matter!

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As a long-term holder of STG and veSTG, I find this acquisition proposal by the LayerZero Foundation to be fundamentally flawed and inequitable. It undervalues Stargate’s assets and potential while disproportionately benefiting LayerZero at the expense of existing stakeholders.

1. Undervaluation of STG: The proposed price per STG fails to account for Stargate’s substantial growth prospects, particularly in light of the expanding stablecoin market. Recent revenue figures and projections for trillion-dollar stablecoin volumes suggest significant upside potential—historically, STG has traded as high as $4. Acquiring the protocol for approximately $110M overlooks this intrinsic value and resembles an opportunistic bid rather than a fair-market transaction.

2. Inadequate Compensation for veSTG Holders and Stakers: Long-term stakers, who have committed capital and foregone liquidity to support governance and emissions, receive no differentiated treatment. The flat 1:0.08634 STG-to-ZRO swap offers neither a premium for lock-up periods nor continued revenue participation. The elimination of the 50/50 fee split, with all future revenues redirected to ZRO buybacks, effectively dilutes our positions and transfers value to LayerZero’s ecosystem without reciprocal benefits.

3. Structural Imbalances and Lack of Transparency: The deal grants LayerZero full control over Stargate’s technology, revenue streams, and roadmap, while dissolving the DAO and imposing a rushed seven-day voting window. This precludes competitive bidding from other entities (e.g., major stablecoin issuers) and raises questions about the process’s integrity. A more equitable approach would involve extending the timeline—potentially to November—to allow market developments and alternative offers.

In summary, this proposal appears designed to consolidate LayerZero’s position rather than foster genuine synergy, potentially eroding trust in decentralized governance. I urge fellow holders to vote against it on Snapshot and advocate for revisions, such as a 1:1 ZRO swap, lock-up-based premiums, and sustained revenue sharing. Stargate’s independent trajectory remains viable and preferable under these terms.

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As a holder of both STG and ZRO, I support this acquisition as a positive step for the long-term health of both projects.

Operationally, managing two separate tokens creates friction and slows down decision-making. Unifying under ZRO streamlines governance and aligns the ecosystem toward a common goal, which is fundamentally bullish.

Regarding valuation, the market is the most objective measure. Many point to Stargate’s revenue, but we must also ask why the token price was near its all-time low before this proposal was announced. The market had already priced in the protocol’s standalone value.

However, I agree that long-term stakers deserve better compensation. veSTG holders locked capital and took on significant risk. A flat conversion rate doesn’t acknowledge their contribution, and a premium for these holders should be considered to make the deal more equitable.

Ultimately, STG holders must decide if they are better off post-acquisition: holding a standalone bridge token, or a token representing a stake in the broader, unified LayerZero ecosystem. I believe the latter offers a more compelling path for future growth.

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Better to have beneficial plan for STG holders

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I have staked STG for more than a year. Looking for better options for STG stakers.

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Everything is about opportunity. This offer is a good opportunity in a good time, for everyone. Let’s build together and go ahead!

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this is good for Linea community

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