LayerZero Foundation has unveiled a $110 million plan to acquire Stargate Finance, aiming to merge the two cross-chain protocols under a single token.
Key Takeaways
- 1LayerZero proposes acquiring Stargate Finance in an all-token deal valued at $110 million.
- 2All STG tokens would be converted into ZRO at a fixed rate of 1 STG to 0.08634 ZRO.
- 3The move would eliminate Stargate’s staking rewards program, sparking backlash from STG holders.
- 4Both tokens jumped more than 15% in value after the announcement.
What Happened?
The LayerZero Foundation has made a formal proposal to acquire Stargate Finance for $110 million. If approved by Stargate’s decentralized autonomous organization, the deal would end STG as a standalone token, with all holders swapping their tokens for ZRO at a predetermined rate. The proposal is now open for community comment for seven days before a final vote.
Merger Details and Exchange Terms
The acquisition plan would see STG token holders exchange their holdings for ZRO at a rate of 1 STG to 0.08634 ZRO, valuing Stargate’s ecosystem at $110 million based on current market prices. Stargate was originally launched in 2022 by the same team behind LayerZero, and the acquisition would bring the bridge platform back under direct LayerZero control.
Stargate facilitates cross-chain asset transfers using liquidity pools rather than traditional blockchain bridges, a design touted as offering greater security. LayerZero says merging the platforms will streamline operations, unify governance, and accelerate development.
LayerZero CEO Bryan Pellegrino described the deal as creating “a single stack that anybody integrating within the LayerZero ecosystem can adopt,” adding that it would give both projects “a unified direction” and “more resources to ship faster.”
Bring the Bridge Home.
,Bryan Pellegrino (臭企鹅) (@PrimordialAA) August 10, 2025
Every day decisions get made internally at @LayerZero_Core on products to build, partnerships made, integrations
Every day small micro decisions of do we do it ourselves, send them to Stargate, who writes the code.
All of this is overhead
All of this… https://t.co/KUr9AHEasr
End of Staking Rewards Sparks Outcry
One of the most controversial aspects of the proposal is the elimination of Stargate’s current staking program, which recently generated $939,000 in quarterly payouts for STG holders. Under the new structure, revenue from Stargate’s bridge fees would go directly to the LayerZero Foundation, potentially funding token buybacks for ZRO but offering no fixed yields to former STG holders.
Many in the community see the proposed swap ratio as undervaluing STG given its strong revenue generation and historical performance. Some have called for a higher exchange rate, with suggestions ranging from improved compensation terms to a 1:1 swap.
A Stargate user on the forum called the offer “not attractive at all,” noting the loss of staking and revenue sharing. Others agreed that while merging tokens makes sense for operational efficiency, the proposed terms are “fundamentally flawed.”
Market Reaction
The market quickly responded to the news. ZRO surged over 23% in 24 hours to trade around $2.44 to $2.50, while STG gained roughly 16.5%, climbing to just over $0.19. Both tokens are still trading far below previous highs, with ZRO down 67% from its December peak of $7.47 and STG down over 95% from its mid-2022 high of $4.14.
Traders have noted bullish momentum for ZRO, with technical indicators suggesting the potential to test resistance at $2.8. However, analysts caution that the rally could be followed by a liquidity-driven pullback.
CoinLaw’s Takeaway
From my perspective, this is a classic crypto governance flashpoint. On paper, unifying Stargate and LayerZero makes strategic sense. It cuts redundancy, consolidates liquidity, and could push the LayerZero ecosystem toward faster development. But the elephant in the room is the token swap ratio and loss of staking rewards. STG holders are being asked to trade a revenue-generating asset for a token without fixed yields, and that is a hard sell. Unless LayerZero sweetens the terms, I would not be surprised to see a fierce DAO debate and a split in the vote.
