The original text is from matt

Compilation | Odaily Planet Daily Golem

Editor's Note: On the morning of August 18, the LayerZero Foundation's proposal to acquire Stargate has begun voting, with a current support rate of 97.09%. Voting will end on August 24. Based on the current vote count, LayerZero's successful acquisition of Stargate seems to be a foregone conclusion. So, who will be the biggest beneficiary of this acquisition?

Proposal Summary

LayerZero aims to acquire the Stargate tokens and its treasury (specifically, the treasury supports a value of $0.1444 for each STG token), thereby terminating the Stargate DAO and merging it with an economy driven by ZRO. The acquisition price is $0.1675 per STG, with 1 ZRO = 0.08634 STG.

The proposal still follows the standard procedures as other proposals published on Stargate DAO, requiring at least 1.2 million votes and a quorum of 70% for the vote to pass. If the acquisition is approved, any excess revenue generated by Stargate in the future will be used to reduce the circulating supply of ZRO through buybacks.

Who are the biggest beneficiaries of the acquisition?

In the current situation, LayerZero and ZRO token holders seem to benefit the most from this acquisition, as it is a liquidity acquisition conducted through their own tokens. This means:

• The acquisition is at a 16% premium over the STG price supported by the Stargate treasury, while also increasing the number of ZRO holders;
• Revenue comes from fees generated by the protocol, with DefiLlama data showing that the Stargate protocol generates an annual revenue of $1.74 million. These fees will be used to buy back ZRO on the open market;
• The economic model of ZRO tokens will be vertically integrated with the cross-chain business that LayerZero excels at, enhancing its utility through buybacks.

But what can STG and veSTG (locked STG) holders gain? Actually, not much.

Due to the recent price increase of ZRO tokens, the discount has decreased, and due to market volatility, the premium on STG is small, with a clear price floor. After some discussion, LayerZero decided to pay six months of Stargate's revenue to veSTG holders, as they cannot unlock their tokens before the end of the lock-up period.

Complaints from STG Holders

There are many points worth discussing here, but I think it all boils down to one word: compromise. In the current situation, LayerZero is expected to gain more benefits, while Stargate token holders will at least not feel satisfied.

Dissatisfaction of STG holders

Here are three main issues and uncertainties:

• At what premium should LayerZero acquire STG tokens?
• For STG holders, which is the "lesser of two evils" choice? Is it to permanently sell their tokens or choose a safer option with not much return?
• Given that the average lock-up period is about a year, and if the proposal passes, they can only receive six months of compensation, what is the incentive mechanism for veSTG holders now?

The FDV of STG is only about 10% lower than ZRO, while $8.1 million worth of STG is locked as veSTG. Many STG holders are demanding a 1:1 exchange between ZRO and STG, but this is unreasonable, as it would mean they could immediately gain 12 times the return, while LayerZero would have to invest the entire FDV to acquire a well-funded but currently low-revenue company.

The acquisition is expected to achieve a win-win situation

While the LayerZero team should consider reassessing the premium paid to STG holders and providing a better revenue-sharing plan for stakers, this acquisition is not catastrophic for the Stargate project itself.

Because the DAO primarily relies on revenue and token issuance for financing, and tokens like STG have already dropped over 95% from their historical highs, with an annual revenue of only $2 million, Stargate has little room for further expansion. Additionally, Stargate has already relied on LayerZero's infrastructure, so with LayerZero's tech stack and financial support, Stargate can more easily deliver and expand more features.

This acquisition makes sense for Stargate. That said, the retention and loyalty of STG holders to LayerZero will largely depend on how the team handles this matter. Otherwise, LayerZero may lose a significant number of new potential loyal ZRO holders and Stargate stakeholders, who have typically supported Stargate since the project's inception.

However, this is not a predatory acquisition, as LayerZero's current earnings are certainly far greater than those of STG and veSTG token holders.

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