The blockchain messaging protocol LayerZero has successfully secured the bid to acquire the crypto protocol Stargate after a tumultuous initial offer and a late-stage bidding competition involving four contenders.
On Sunday, Stargate’s community voted with a 95% majority to approve LayerZero Foundation’s revised acquisition proposal of $110 million, which was adjusted after feedback from Stargate (STG) token holders indicated the original deal was perceived as inequitable.
Three competitors of LayerZero made last-minute bids or expressed interest in acquiring Stargate, with one bidder, Wormhole, unsuccessfully attempting to pause the vote on LayerZero’s acquisition.
LayerZero developed and launched Stargate in 2022, and this new deal restores the platform back under its original control. Stargate enables transfers across different blockchains via liquidity pools, allowing assets to be exchanged natively, as opposed to relying on blockchain bridges, which have a track record of vulnerabilities.
LayerZero boasts record participation
On Sunday, LayerZero co-founder and CEO Bryan Pellegrino announced on X that the Stargate community vote achieved “the highest participation for any vote” in the platform’s history.
The voting portal indicated that over 15,000 addresses participated, with 94.76% representing 7.2 million STG tokens voting in favor, while 5.24%, or 399,400 tokens, voted against.
“Not only did ~95% of the stake weight vote positively, but ~95% of addresses voted in the affirmative,” Pellegrino elaborated.
Wormhole made an offer for Stargate
Wormhole submitted a proposal on Saturday, claiming on Wednesday that it would “provide a significantly higher bid,” arguing that LayerZero’s offer “fails to present a compelling value for Stargate’s ongoing business.”
Wormhole proposed a $120 million all-cash acquisition, stating that stakers of Stargate’s token would “receive three times the projected revenue for the next six months, expedited and paid immediately, as part of our successful acquisition.”
Axelar, Across also considered a bid for Stargate
The cross-blockchain platforms Axelar Network and Across Protocol also expressed their interest in bidding for Stargate on Sunday, both indicating the need for the vote on LayerZero’s bid to be postponed.
Across co-founder Hart Lambur noted on Stargate’s forum that he had been advised to submit an offer for Stargate but had “no interest in hurrying a last-minute proposal; however, if the process is slowed down and other bids are thoroughly evaluated, Across will join.”
Shortly after, the Axelar Foundation indicated on the forum its “strong interest” in bidding, stating that if a “competitive process” was established, it would propose “a comprehensive offer and encourage Stargate to explore all options before finalizing any decision.”
However, Stargate Foundation lead Angus Lamps responded to the bids by stating that the vote on LayerZero’s offer cannot be paused, and that Stargate “is open to engaging with any parties” that sign a non-disclosure agreement and wish to conduct due diligence.
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LayerZero’s initial proposal suggested utilizing Stargate’s surplus revenue for a ZRO buyback plan, which several Stargate community members labeled as “not appealing” since it offered no benefits to STG holders.
It modified the proposal on Sunday to allocate half of all top-line revenue for six months to Stargate stakers, with the other half designated for buying back its LayerZero (ZRO) token.
According to the approved agreement, all circulating STG will be exchanged for ZRO at a ratio of 1 STG to 0.08634 ZRO.
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