LayerZero Secures Stargate in $110 Million Acquisition
KEY FACTS: LayerZero, a blockchain messaging protocol, won a $110 million acquisition of Stargate, its cross-chain protocol, in a heated four-way bidding war against Wormhole, Axelar Network, and Across Protocol, with the Stargate community approving the deal by a 95% vote on August 24, 2025. The revised offer, which included a 1:0.08634 STG-to-ZRO token swap and six months of shared revenue for staked STG holders, addressed earlier community criticism and secured the highest voter participation in Stargate’s history. Despite Wormhole’s $120 million all-cash counteroffer and calls for a slower bidding process, LayerZero’s proposal prevailed, consolidating its control over Stargate’s $345 million TVL and $76.47 million stablecoin treasury.
Sources: LayerZero, Stargate
LayerZero Secures Stargate in $110 Million Acquisition
Blockchain messaging protocol LayerZero has emerged victorious in a highly competitive four-way bidding war to acquire Stargate, a cross-chain protocol it originally developed and launched in 2022. The Stargate community, with an overwhelming 95% majority, voted on Sunday, August 24, 2025, to approve LayerZero’s $110 million acquisition proposal, marking a significant milestone in the rapidly evolving world of cross-chain interoperability. The acquisition brings Stargate back under LayerZero’s control.
LayerZero’s initial proposal, unveiled earlier in August, faced significant backlash from Stargate token (STG) holders, who criticized it as “not attractive at all” due to its lack of clear benefits for the community. The original offer centered on using Stargate’s excess revenue for a buyback program of LayerZero’s native token, ZRO, which many felt undervalued Stargate’s potential and offered little to STG holders. In response to the criticism, LayerZero revised its proposal, presenting a more compelling deal that ultimately won over the community.
The revised offer, finalized on Sunday, August 17, 2025, included a token swap at a ratio of 1 STG to 0.08634 ZRO, alongside a commitment to share half of Stargate’s top-line revenue with staked STG holders for six months. The remaining half would be used to buy back ZRO tokens, aligning the interests of both projects while addressing community concerns about fairness. This adjustment proved pivotal, as the Stargate community’s vote saw unprecedented participation, with over 15,000 addresses casting ballots. According to LayerZero co-founder and CEO Bryan Pellegrino, the vote marked “the highest participation of any vote” in Stargate’s history, with 94.76% of the 7.2 million STG tokens voted in favor, while only 5.24%, or 399,400 tokens, opposed the deal. Pellegrino emphasized the overwhelming support, noting that “~95% of addresses voted in the affirmative,” signaling strong community backing for the acquisition.
The acquisition process was complicated by the late entry of three rival bidders: Wormhole, Axelar Network, and Across Protocol, each vying for control of Stargate’s robust cross-chain infrastructure. Stargate, known for facilitating asset transfers across blockchains using liquidity pools, has processed billions in bridge volume, including $4 billion in July 2025 alone, and boasts a total value locked (TVL) of $345 million. Its treasury, reportedly holding $76.47 million in stablecoins, $15.9 million in Ethereum, $55 million in STG tokens, and $5.24 million in other assets, further underscored its value as a prime acquisition target.
Wormhole, a prominent cross-chain bridge, made the most aggressive move, submitting a $120 million all-cash offer on Saturday, August 23, 2025, just before the community vote. Wormhole argued that LayerZero’s $110 million token-swap proposal undervalued Stargate’s ongoing business, particularly given its $2 million in estimated annual revenue and integration across over 80 blockchain networks. The all-cash bid promised STG holders immediate liquidity, equivalent to three times the projected revenue for the next six months, paid upfront. Wormhole also requested a five-day pause in the voting process to conduct due diligence on Stargate’s financials, bridge volume, treasury, and potential liabilities, emphasizing the need for a “more competitive process.” However, Stargate Foundation lead Angus Lamps rejected the request, stating that the vote could not be paused and that Stargate had been open to engaging with parties willing to sign non-disclosure agreements for due diligence.
Axelar Network and Across Protocol also expressed interest in bidding but were less definitive in their proposals. Across co-founder Hart Lambur indicated that his platform would participate if the voting process were slowed to allow for proper consideration of competing bids, but he had “no interest in rushing an 11th-hour proposal.” Similarly, the Axelar Foundation signaled “strong interest” in submitting a comprehensive proposal if a competitive process were established, urging Stargate to collect all options before deciding. Despite these efforts, the momentum behind LayerZero’s revised offer proved too strong, and the community’s decision to move forward with the vote effectively sidelined the rival bids.
The announcement of the acquisition and the ensuing bidding war sent ripples through the cryptocurrency markets. Following the initial proposal on August 10, 2025, both STG and ZRO tokens experienced significant price surges, with STG climbing 16.5% to just over 19 cents and ZRO jumping 23% to $2.44 within 24 hours. Over the subsequent week, ZRO gained nearly 40%, outperforming many other tokens in the market. However, both tokens remain well below their historical highs, with ZRO down 67% from its December 2024 peak of $7.47 and STG down over 95% from its mid-2022 high of $4.14. Wormhole’s token (W) also saw a 6.3% increase to just over 8 cents following its bid announcement, while STG briefly touched 18 cents before settling at around 17 cents.
Community sentiment has been mixed, reflecting the wider tensions in DeFi between efficiency and decentralization. While some STG holders welcomed the revised LayerZero proposal for its revenue-sharing component and the promise of a “more liquid token” under LayerZero’s governance, others expressed concerns about the loss of Stargate’s decentralized autonomous organization (DAO). Critics argued that the 1:0.08634 STG-to-ZRO swap rate undervalued Stargate’s potential, particularly given its robust bridge volume and TVL. Some community members also lamented the lack of staking incentives for ZRO, viewing it as a missed opportunity to reward long-term holders. The dissolution of Stargate’s DAO, which will occur upon the deal’s completion, has further fueled debates about whether the acquisition prioritizes efficiency over the decentralized ethos central to DeFi.
The acquisition represents a significant consolidation move in the DeFi ecosystem, as protocols increasingly seek to streamline operations and bolster their market positions amid growing competition. Stargate’s unique approach to cross-chain transfers, which relies on liquidity pools rather than traditional blockchain bridges prone to hacks, has made it a critical player in the interoperability space. LayerZero is bringing Stargate back under its umbrella to unify its governance and liquidity frameworks, creating a more robust cross-chain messaging and transfer ecosystem. CEO Bryan Pellegrino described the move as a step toward a “single unified direction,” arguing that it would enhance Stargate’s ability to execute its roadmap and strengthen LayerZero’s position against competitors like Wormhole, Synapse, and Axelar.
The acquisition, valued at $110 million, is one of the largest in DeFi to date and could reshape the competitive landscape for cross-chain protocols. For STG holders, the deal offers financial incentives through the token swap and revenue-sharing period, but the loss of Stargate’s DAO raises questions about the long-term role of community governance in the protocol. The outcome of this acquisition battle shows the high stakes in the race for cross-chain supremacy.
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