Stargate DAO approves LayerZero acquisition, despite last-minute interest from Wormhole, Axelar, and Across

The decentralized governance organization behind cross-chain bridge Stargate has voted to approve an acquisition offer from the LayerZero Foundation, which stewards the interoperability protocol of the same name. 

The offer was approved with nearly 95% of votes in favor after LayerZero modified the terms of its offer to appease holders of Stargate's native STG tokens. Under the terms of the proposal, the Stargate DAO will be dissolved and STG holders will be able to swap their holdings for LayerZero's native ZRO tokens at a ratio of 1 STG : 0.08634 ZRO. At current token prices, the deal is valued around $120 million. 

Though STG holders who locked their tokens to receive veSTG and a portion of Stargate's bridge fee revenues were originally going to lose their yield income under the terms of the original deal, LayerZero Foundation modified the offer before the vote began, offering veSTG holders 50% of Stargate's top-line revenue for six months following the vote's passage. The remaining 50%, and later all Stargate "excess revenue," will be used to buy and burn ZRO tokens under the terms of the proposal. 

The final days of the vote were complicated by a rival $120 million cash offer from the Wormhole Foundation, a LayerZero rival, which requested that the vote be paused for five days so that the Stargate DAO can evaluate the competing offer. Wormhole said it secured financing for $120 million in USDC stablecoins and moved the funds into a segregated wallet. 

Following Wormhole's counter-offer, cross-chain protocols Axelar and Across also expressed interest in bidding for Stargate, though they acknowledged that the ongoing vote would need to be slowed down in order to make a proper bid. 

"I have no interest in rushing an 11th hour proposal, however if this process is slowed down and other bids are properly considered, Across will participate," Across co-founder Hart Lambur wrote on the proposal's discussion page. "I do honestly believe it would be in the best interests of Stargate holders to run a proper process with other bidders."

The Axelar Foundation echoed the sentiment in its own post . "If a competitive process is initiated for the Stargate acquisition, we would be very interested in preparing a comprehensive proposal and encourage Stargate to collect all options before making a decision," the firm wrote. The Block was unable to reach Lambur or the Axelar Foundation for additional comment. 

Despite some chatter around pausing the LayerZero acquisition vote, the vote was finalized on Saturday night. “LayerZero has spent the last four years laying the infrastructure that enables the most efficient form of money transfer ever,” said Bryan Pellegrino, CEO of LayerZero Labs, in a statement. “Stargate’s return gives the LayerZero ecosystem a clear access point to the end-consumer, an immediate revenue-generating asset, and a clear focus on accelerating the velocity of value transfer.” 

LayerZero also framed the acquisition as a win for mergers and acquisitions in crypto, calling the deal "one of – if not – the first private acquisitions of a DAO over $100M." 

Stargate, which LayerZero calls the most widely used bridge in crypto, was originally launched by LayerZero in 2022. Its native STG token has struggled compared to the native tokens of other popular bridges, its market cap currently sitting below Wormhole and Axelar. LayerZero currently trades at $2.13 following a 2.3% rise over the past twenty-four hours, according to The Block's ZRO Price page.