I converted similarly as Paul.
With this further explanation from LZ, and the question of stakers taken into consideration, I am for it.
S.
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I don’t understand why STG is so undervalued even by layerzero itself. It’s one of the most successful app in crypto.
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That’s a long way to say: we want to use Stargate’s revenue for ZRO token buy backs.
That is Layer Zero’s stated ultimate desire for Stargate : token buy backs.
That’s it. That’s the explicit end goal for Layer Zero. Token buy backs. You can just say, “we want Stargate’s revenue to buy the ZRO token.” Just be honest. LZ Foundation sells 8% of their premine tokens to buy something that actually has revenue, and they use it to buy it back the ZRO tokens over time.
In July, you posted:
“The next 6 months for Stargate are going to be massive. So much coming down the pipeline, and working closely with some of the biggest names to keep pushing at the absolute frontier. We’re hiring a Head of Partnerships to work alongside me in these initiatives.”
Do you think that, perhaps those partnerships and expansion might fix Stargate’s budget constraints? Or are we expected to pass that future economic value on to ZRO token buy backs?
Frankly, I would like to hear more about Stargate “working closely with some of the biggest names.” I would like to see what comes of that. In the meantime, maybe you could stretch the budget by cutting back on costs such as hockey jerseys. BTW, how much were the hockey jerseys as a % of monthly revenue? It would suck if we had to dissolve the DAO because of frivolous expenses on things such as hockey jerseys.
For a Foundation Lead, you seem really intent on dissolving the Foundation that you are leading, with not much offered in the way of alternative paths. No counter-offer, nothing. Perhaps further restructuring is needed in these trying times.
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As a veSTG staker, I support this updated proposal to release all STG inmates.
The 6 months of continued fee distributions soothe my disappointment around the loss of the revenue sharing model. Considering Stargate will have the full resources of Layerzero behind it, I would expect the fee distributions to increase by factors.
In addition, being granted access to my currently locked liquidity totally eliminates the opportunity cost of participating in STG emissions/governance. This is especially a good deal for the prisoners who recently max locked or re-locked prior to the proposal.
I believe voting this proposal down would likely lead to the eventual demise of Stargate in its current form. We should move this to a vote according to the given schedule, barring any unexpected plot twists or confusion.
D I S C L A I M E R
While it’s great to get a bribe, if I was simply holding STG tokens expecting a price increase, I would not be satisfied whatsoever by this proposal. I am supporting this proposal simply out of my own personal interests as a DAO voter.
Merging Layerzero and Stargate makes business sense for Layerzero, however it may not make sense for STG holders, who understood that Layerzero and Stargate were unrelated entities. This was a topic that historically seemed to be obfuscated and intentionally difficult to figure out.
Prior to this proposal, in stark contrast, the messaging from the Stargate team tended to minimize the now highlighted relationship between themselves and Layerzero.
I am happy to take the bribe but this is a reminder to all that crypto is still the wild west. It is all gamesmanship and Layerzero is playing to win at the expense of whoever, while still parroting the same goofy and disingenuous “altruism” as espoused by the Bankman. Everyone involved has their own self-interests and delusions. Dog eat dog.
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The LayerZero Foundation will update this proposal exactly seven days after the initial proposal went up to reflect changes for veSTG holders, as per governance rules.
The new proposal, which will be posted on August 17th, will remain for 3 days before going to Snapshot on August 20th.
From there, it will be sent to vote, which we are extending from the StargateDAO-mandated three day window to seven days. This means voting will conclude on August 27th.
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Back of an envelope …
veSTG staking income (https://stargate.finance/stake) is 80% with 25% of tokens locked so ‘dilutes’ to 25% x 80 = 20% per STG token.
For comparison, the AAVE safety module yields 3.4%. (https://app.aave.com/safety-module/) Under the terms of the bid, the STG staking lock does not hold so the liquidity terms are comparable. But STG is not (yet!) the ‘blue chip’ that AAVE is so might I want a slightly higher yield, let’s say 4%
The STG offer price should be the price which gives me that 4% yield if the current 20% income per STG token remains the same (a critical assumption!)
so 20% / 4% x 18c (current price) = 90c.
Proposed payment is in ZRO so it’s a token offer not a cash offer and, because of the very clear and valuable STG-ZRO strategic fit, I reckon 80c of ZRO tokens would be good and fair number.
Different numbers in, different number out, but this is how I am thinking about it.
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voting is live for this proposal here: https://snapshot.box/#/s:stgdao.eth/proposal/0xf5516dd3c7c19d3182431ebac9af33abffdcba74a3440fdf851a96e58784d25c
- Paul Langford
Will the vote close early given the overwhelming yes response?
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While I think overall this acquisition might be very beneficial for Stargate in the long run, there are still some issues in the proposal itself that I openly addressed here in this post: https://x.com/mattdotfi/status/1957076285525574143
I’d like to know your perspective on this, especially if you are supporting this proposal or if you’re part of the LayerZero team.
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Hi Paul Langford here,
I disagree with a core premise of your article: that STG holders are unhappy with the terms. Some clearly are, but the majority clearly or not. We know this to be true by the success of the vote thus far.
I think you are missing a key element here: STG holders get ZRO tokens. LayerZero will find ways to buy and burn an ever increasing amount of ZRO. ZRO as a result has strong upside potential that far exceeds the upside opportunity of STG.
As someone with a significant amount of STG and veSTG, I fully support this deal and am excited to see what LayerZero does with Stargate in the future.
Personally, I would like to vote, but the site has been inaccessible since the start of the vote. I have a DNS_PROBE_FINISHED_NXDOMAIN error.
Hi Paul, thanks for the reply and thanks for reading the article.
In case my point wasn’t clear enough, I think STG holders should support this proposal, even though I personally think both the premium of STG (now below market price) and the revenue sharing plan for veSTG seems like just partially beneficial since on average veSTG holders have their funds locked for at least another year.
Adding two more things:
- I highlighted the benefits of the deal, STG to ZRO conversion and buybacks included, so I’m not sure what your point is there.
- What if the “premium” LayerZero pays to STG holders at the end but becomes a discount on the treasury value (for LZ) due to tokens in inactive wallets and on exchanges? I don’t see a plan to recover those funds, so basically that premium is not that accurate at the current status of things. But perhaps I’m missing something here.
The fact that this post was deleted once already is quite troublesome.
I did not break any community guidelines.
I’ve posted this to X, and sharing it again here. I’ve also circulated this information to various parties who I believe would be interested. Deleting this post again will only sound the alarm louder.
Are LayerZero and Stargate separate enough to justify an acquisition?
Sharing some concerns that I have around the situation & really think that the community at large should know about this.
You can read the entire document here: Declaration (FTX v. LayerZero)
- LZ and Stargate shared a join FTX account with co-mingled funds according to this verified response to an interogatory.
- Bryan and his team would often work out of the FTX offices & regularly stayed at the FTX compound.
- FTX would often pay for the LZ / SG team accommodations.
- Alameda borrowed money from LayerZero.
- Shortly after Bryan’s pinned tweet, on March 17, 2022, Alameda bought all the STG tokens that got auctioned off.
- Bryan messaged Caroline directly during the FTX melt down.
- Bryan then offers to buy back all the FTX ZRO and STG and LZ equity, in exchange for paying $25m+$45m loan forgiveness ($70m total).
- In a classic bait and switch, Bryan undercuts Caroline (and FTX creditors) by lying and dropping his offer from $25m to $10m.
- Bryan took advantage of Caroline and the situation that was unfolding at FTX.
- Bryan knew about the FTX situation before the public knew, and leveraged that knowledge to his benefit. [Additional Image 1] / [Additional Image 2]
Additionally - it’s fairly widely known that Bryan sold 10s of millions of STG at $4 in secondary sales to fund the purchase of his luxury home and a soccer team.
These facts are enough to raise some questions.
Is this acquisition truly in the best interest of the LayerZero and Stargate communities?
Or is this deal really meant to benefit Bryan again?
3 Likes
Okay, so what’s going to happen with my locked up STG? I’ve had my tokens locked up since 2022 or 2023.
Wormhole Foundation’s Intent to Bid
The Wormhole Foundation has great admiration for the Stargate protocol, team, and holders. The Stargate protocol has consistently been in the top ten of consumers of cross-chain messages and bridge volume. Since LayerZero posted its bid to acquire the circulating supply for STG in a token swap for ZRO, valued at approximately $110M at the time, the Wormhole Foundation has been carefully reviewing publicly available information. Based on our initial review, we believe that STG holders deserve a more competitive process, and we are prepared to submit a meaningfully higher bid. We expect others will do the same. If this process is run transparently and at arm’s length, Stargate will receive the appropriate valuation, assuming the community decides to sell.
LayerZero’s offer at the time: $110M in ZRO for roughly $76.47M in stablecoins and $15.90M in ETH, plus the permanent capture of all future protocol revenue. Treasury alone is ~$92M, excluding STG tokens, yet the proposed deal hands over assets and ongoing economic upside for only $110M in token consideration. It doesn’t create a compelling offer, which values Stargate’s ongoing business at an unreasonably low number.
To maximize value for Stargate token holders, the Wormhole Foundation respectfully requests that the ongoing Snapshot be suspended for five business days to allow the Wormhole Foundation sufficient time to finalize our offer. We believe this modest delay will ensure a fairer process and maximize economic outcomes for all stakeholders. (CC: @Paul_Langford, who posted the original proposal)
In the interest of transparency, the Wormhole Foundation has been reviewing the assets of the Stargate DAO and the Stargate Treasury:
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The Stargate DAO Treasury
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$76.47M in stablecoins
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$15.9M in Ethereum (ETH)
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$55M in Stargate Tokens
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$5.24M in other assets
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Approximately marked to their current value. Source
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The Stargate Protocol
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$4B in bridge volume in July
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Bridge volume is up 10X from July 2024
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Protocol TVL: $345M
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Projected annual revenue $2M/year
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Live across 80+ Chains
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The Stargate protocol is widely integrated
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The Stargate Foundation assets
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The Stargate interface
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The Stargate codebase
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The Stargate team
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The Stargate brand and reputation
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The Wormhole Foundation would appreciate additional time to conduct research and to speak with the Stargate team.
Based on the information available to the public, reported assets, the performance and growth of the Stargate Protocol, the demonstrated execution of the Stargate Foundation, and the strategic value, the Wormhole Foundation can improve upon the current offer if more time is allowed to conduct a proper process.
Why Wormhole
Wormhole Foundation’s acquisition of Stargate would combine the two most important players in cross-chain infrastructure into a single, market-dominant ecosystem. Stargate brings deep, unified liquidity pools and proven user demand, while Wormhole commands broad ecosystem integration across dozens of blockchains and protocols, as well as key growth areas in crypto, like RWAs.
Stakeholders will benefit from higher volumes, stronger fee generation, and greater ecosystem stickiness.
The Wormhole Foundation sees unrealized value in the Stargate brand, protocol, and protocol assets. The Wormhole Foundation is confident that a successful combination of Stargate and the Wormhole ecosystem will lead to the most immediate and long-term value for current holders of STG, as well as current and future holders of Wormhole (W).
Request for Additional Information
For the Wormhole Foundation to make the best possible offer, and to shorten the diligence period after any acceptance of that offer, we request several items of information and points of clarification from @StargateFoundation. We are willing to review some of them under NDA if required.
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Exhaustive list of assets that are for sale and transfer, including in any transaction by the Stargate Foundation. This should include all administrative privileges, intellectual property, trademarks, software, and property on/off-chain.
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An accurate and up-to-date accounting of protocol-owned assets, including liquidity deployed in the Stargate protocol or other protocols.
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Provide the best available data on users, traffic sources, and other relevant metrics that the Stargate Foundation can offer to drive the most competitive bid.
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Accounting of the current Stargate Foundation team.
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Financials for the Stargate Foundation since inception and planned financials for 2025.
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Any outstanding liabilities and contingent liabilities that the Stargate Foundation has or is a party to.
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Any outstanding liabilities the Stargate Protocol has or is a party to.
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Disclose any ongoing lawsuits or regulatory actions against Stargate Foundation, as well as any anticipated tax liabilities or other encumbrances that may need to be settled to transfer assets from Stargate Foundation to Wormhole.
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To the Wormhole foundation team:
I personally don’t support a delay in the process for you to decide if you want to bid. Others of course may feel differently.
You can make a conditional offer now for the DAO to consider (as can anyone). Anything less is hot air.
Paul
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Thank you for your comment.
Please feel free to reach out to me to clarify any questions you have for the Stargate Foundation, including the list at the bottom of your comment.
Snapshot votes cannot be paused, but you can continue to conduct your DD.
I support delaying the active vote to consider this proposal from Wormhole. I encourage all veSTG holders to reconsider voting yes.
My vote has changed to a solid no.
Wormhole has the resources to develop Stargate and regardless of their intentions, we’d benefit from the additional due diligence.
I’d also like to note the recent selections of Wormhole bridge by Uniswap, Blackrock, Circle, Aave….
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I am confused. LayerZero themselves said a revised proposal will be posted on August 17th, and the Snapshot vote will be posted on August 20th, after an additional 3 day review. Why did this not happen?
STG holders deserve to see LayerZero’s revised proposal and have more time to consider all information (including alternative proposals).
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Hi everyone, I’m Lawson Bae, founder of Relayzero, a crypto M&A advisory firm. I’ve been buying and selling businesses in crypto since 2016 and recently launched Relayzero to focus specifically on onchain M&A.
Back in 2018, I was an early advocate of the idea that onchain cashflow was the future of all protocols and the next era of the Internet (x.com/lwsnbaker/status/1070761288366665728).
That was before 18mo before DeFi summer when the concept was still nascent as MakerDAO was the only real example outside of staking. Since then, we’ve seen the thesis play out with the rise of onchain cashflow and their onchain business operations (referral fees, liquidity incentives, and even marketing - all transparently onchain).
Now, we’re seeing a the next evolution: onchain M&A. The proposal from LayerZero to acquire Stargate marks a milestone in this shift.
That said, it’s important to approach valuations with healthy skepticism—something many in the community here are already doing. I’m not affiliated with Stargate, LayerZero, Wormhole, or any other parties here. But, I’d like to offer a third-party, independent assessment of what’s going on to help ensure fair, transparent valuation for all parties.
I’ll follow up soon with a deeper analysis focusing on publicly available and onchain data, and I welcome open discussion. My preference is to keep that dialogue public so everyone can benefit from it. I’ll start by posting analysis here, but happy to join calls if the community finds it useful.
~ Lawson Bae (x.com/lwsnbaker)
P.S. Relayzero is my independent advisory firm with no association to the parties here. You can read about its origins on my Substack (link at relayzero.com)
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