Recently, a significant event occurred in the cross-chain world of cryptocurrency: the LayerZero Foundation intends to repurchase its originally created cross-chain bridge project, Stargate, with tokens valued at $110 million. This seemed quite logical at first, after all, it’s a "family reunion."
However, a dramatic turn of events unfolded—LayerZero's old rival, Wormhole, suddenly jumped in, claiming that the price was too low and preparing to offer a higher bid to snatch Stargate! In an instant, this internal acquisition turned into a public bidding war, reminiscent of the movie "The Barbarian Invasions."
This is not just a simple acquisition; it marks the official entry of the crypto industry into the "merger and acquisition era." Previously, everyone focused on technology and users, but now capital operations are in play. More importantly, this incident has revealed the true performance of DAO governance in the face of real money, as well as the subtle balance between decentralized ideals and commercial realities.
Why does LayerZero want to "bring the bridge home"?
To understand this acquisition battle, we first need to clarify the relationship between LayerZero and Stargate. Simply put, Stargate is LayerZero's "own child."
A Blood is Thicker than Water Relationship
LayerZero positions itself as a cross-chain messaging protocol, aiming to become the TCP/IP of blockchain. It is not specifically targeting cross-chain asset transfer scenarios, such as Ethereum DeFi projects using LayerZero for cross-chain governance voting, or game developers synchronizing multi-chain game states.
In March 2022, the LayerZero team launched Stargate Finance, a cross-chain asset transfer application built on the LayerZero protocol. It focuses on the most practical asset cross-chain transfer scenarios, bringing significant capital flow and user volume to the LayerZero ecosystem. In simple terms, Stargate is the "showroom" of LayerZero's technical strength, showcasing how powerful its cross-chain technology is. In this landscape, Stargate holds a unique position—it is not only the core product crafted by the LayerZero team but also one of the main contributors to network traffic, serving as LayerZero's "front-end product" and "cash cow."
Interestingly, although they are family, LayerZero initially deliberately kept Stargate "independent": it has its own DAO, its own token STG, and its own governance structure. This was initially due to compliance considerations and aligned with the trend of decentralization at the time. However, although nominally independent, in reality, half of the members of the Stargate Foundation's board are appointed by LayerZero. As the community puts it: "Stargate is LayerZero, and LayerZero is Stargate."
But this separation also laid the groundwork for today's acquisition.
Why Now?
LayerZero chose this moment to act for several reasons:
Explosive Business Growth: Stargate's data is impressive. By July 2025, its cross-chain transaction volume reached $4 billion, a tenfold increase compared to the same period last year! Since its launch, it has processed over $70 billion in cross-chain transfers, with treasury funds amounting to approximately $92 million. This performance made LayerZero realize that Stargate has become a strategic stronghold in cross-chain infrastructure. Especially during the current RWA and stablecoin boom, the demand for efficient and secure cross-chain infrastructure is strong. LayerZero also recognizes that to secure a place in this RWA boom, it must firmly grasp Stargate, the star product in the cross-chain realm.
Eliminating Internal Friction and Improving Efficiency: Although Stargate and LayerZero's management teams are highly overlapping, to reflect their respect for the core value of "decentralization" in blockchain, they still need to go through the motions of "governance decision-making." However, when it comes to actual voting, differences in token distribution lead to factional splits. LayerZero Labs has brought in institutional investors (like a16z, Sequoia, etc.) through multiple rounds of financing, resulting in a high proportion of team and investor ownership; Stargate's STG was initially sold through auctions, leading to a more dispersed token distribution and stronger voices from retail investors. LayerZero's CEO, Bryan Pellegrino, candidly stated that managing two independent entities is too cumbersome, and the coordination costs of various daily small decisions distract the team. Merging would allow them to "run faster and iterate products more quickly."
A Good Time to Buy the Dip: From an investment perspective, acquiring Stargate now is like buying the dip. The STG token has fallen from a peak of $4.14 in early 2022 to the current range of $0.1-$0.2, a drop of over 95%. LayerZero's offered acquisition price is about $0.1675 per STG, slightly above the market price, but compared to historical highs, it’s a bargain.
Preventing Competitive Threats: LayerZero clearly does not want its cultivated Stargate to be snatched away or turn to competitors. This concern has proven to be justified—Wormhole's intervention is the best evidence.
Vertical Integration: Just like Apple makes both hardware and software, acquiring Stargate means LayerZero is shifting from a "neutral platform" to a "vertically integrated" strategy. LayerZero wants to control both the underlying protocol and the upper-layer applications, upgrading itself from a pure communication protocol to a comprehensive platform for communication and liquidity, filling a critical gap in its business landscape.
$110 Million: Is This Price Reasonable?
LayerZero's acquisition plan seems quite straightforward: using $110 million worth of ZRO tokens, at a ratio of 1 STG = 0.08634 ZRO, to exchange all STG tokens. Once the acquisition is completed, the Stargate DAO will be dissolved, STG will exit the historical stage, and all future revenues from Stargate will be used to repurchase ZRO tokens.
The Core of Valuation Controversy
However, once this offer was announced, it sparked doubts about the "price being too low." Why is that?
Wormhole published an open letter in the Stargate community, sharply pointing out that Stargate's treasury has about $92 million in cash and liquid assets like Ethereum! Based on the total offer of $110 million, LayerZero is effectively trying to buy the entire business of Stargate for a net cost of about $18 million (110 million - 92 million).
Moreover, Stargate's business is thriving: in July 2025 alone, the transaction volume reached $4 billion, with a total locked value of $345 million and an annual protocol revenue of about $2 million. LayerZero's offer is almost equivalent to paying for Stargate's net assets, without paying a premium for its future business valuation, essentially acquiring a high-growth business at net asset value.
Some have drawn comparisons to Axelar's market value, estimating Stargate to be worth at least $450 million or more, making the $110 million price indeed seem a bit "too cheap."
Governance Process's "Conflict of Interest" Concerns
What further displeased the community is the apparent "conflict of interest" in this acquisition. Half of the members of the Stargate Foundation's board are appointed by LayerZero, leading many to suspect that regardless of how the community votes, this proposal will pass.
Although the LayerZero team promised that all internal personnel's STG would not participate in the voting, the feeling of "insider trading" still made the community uncomfortable.
Amendment: A "Sweetener" for Long-term Supporters
In response to the criticism, LayerZero quickly made adjustments: in the first six months after the merger, 50% of Stargate's total revenue will continue to be distributed to those long-term stakers of STG (veSTG holders). This move proved to be very effective. Although the total price remained unchanged, by taking care of the most loyal holders, the new proposal received overwhelming support, ultimately achieving a support rate of 88.6%.
This process is quite enlightening: in DAO governance, soothing core stakeholders is more important than simply raising the price. Those long-term stakers represent the project's die-hard fans, and their attitudes often determine the voting outcome.
WORMHOLE's Strong Interference: What’s the Intention?
Just as the acquisition vote between LayerZero and Stargate was heating up, on August 21, 2025, the Wormhole Foundation suddenly struck, publicly stating that LayerZero's offer "seriously undervalues Stargate's worth," preparing to propose a "higher bid," and requesting a five-day suspension of the ongoing vote.
Wormhole's Multiple Motives
Wormhole's move can be described as "killing multiple birds with one stone":
Strategic Acquisition: Operating in the same cross-chain space, Wormhole and Stargate employ completely different methods for cross-chain asset transfers, each with its own advantages and disadvantages:
Wormhole uses a typical lock-mint bridge model. Users lock assets in a smart contract on the source chain, and then Wormhole verifies cross-chain before minting an equivalent wrapped token (like the Wormhole version of USDC) on the target chain. If users want to return to the source chain, they burn the wrapped token on the target chain, triggering the source chain contract to release the native asset. In this model, each cross-chain asset generates a corresponding wrapped asset (for example, ETH on Solana is actually weETH minted by Wormhole). Wormhole's lock-mint model is more capital efficient—it does not require large amounts of pre-allocated funds across multiple chains; as long as users bring their own assets to lock, they can bridge out an equivalent amount of assets. However, the downside is the introduction of wrapped tokens, which requires users and applications to trust that these tokens have 1:1 asset backing and may face difficulties in redemption.
Stargate employs a multi-chain shared liquidity pool model. Simply put, it deploys liquidity pools (mainly for stablecoins and other assets) on each supported chain. When users bridge assets out from the source chain, they inject funds into the source chain pool and withdraw equivalent assets from the target chain pool, thus achieving direct cross-chain exchange of native assets. The entire process is coordinated by LayerZero's messaging to adjust the assets in both pools. Stargate's highlight is that it does not require issuing wrapped tokens; users receive the native assets of the target chain (for example, when transferring USDC across chains, after depositing from Ethereum, they directly withdraw native USDC on Polygon), avoiding the complexities and slippage risks associated with traditional bridges that generate various wrapped asset versions. However, the downside is that it requires a large amount of liquidity to be prepared in advance on each chain, making capital efficiency relatively lower, and there are issues with pool depth and balance across chains.
Wormhole believes that by combining Stargate (which excels in liquidity pools) with itself (which specializes in lock-and-mint), it can create a "super aircraft carrier" in the cross-chain field, establishing a dominant market position.
Tactical Harassment: Many people feel that Wormhole's true intention may be to "hinder" its rival LayerZero. Just think about it, even if they ultimately cannot make the purchase, forcing LayerZero to pay a higher premium and "spend more money to buy back its own product" would deplete its resources; or creating some chaos in their community could slow down their development pace. For Wormhole, this is a win-win situation.
Establishing an Image: By making this statement, Wormhole has also established a good image of "fighting for community interests." By playing the role of a "white knight" seeking greater benefits for Stargate shareholders, it has certainly captured attention.
This is a competitive strategy with almost no risk of failure—either acquire the core asset or force the opponent to spend more money and lose face.
Is WORMHOLE Serious?
Any assessment of Wormhole cannot overlook an important historical event: in February 2022, Wormhole suffered one of the largest hacks in DeFi history, losing over $320 million. However, the subsequent developments were quite dramatic: Wormhole's main supporter, Jump Crypto, immediately stepped in and fully compensated all user losses. This unprecedented "bailout" action, while exposing early security issues, also showcased the strong financial backing behind Wormhole.
The initial hole of over $300 million was filled instantly, so raising funds should not be a problem. Additionally, Wormhole's statement emphasized that they need time to research Stargate's financial and risk status, implying that they are indeed serious about due diligence and financing. The Wormhole Foundation has requested the Stargate team to provide detailed asset lists, user data, legal risks, and other information for evaluation. These actions indicate that Wormhole is taking this potential acquisition seriously, rather than merely stirring the pot with a price increase.
Who is the Winner? Market Impact Analysis
Initial Reactions from All Parties
After Wormhole's statement, Stargate's official social media, which had previously interacted warmly with LayerZero, chose to remain silent and not express any stance. LayerZero co-founder Bryan briefly responded on the X platform: "That's not happening." This indicates that LayerZero is quite resistant to Wormhole's intervention, showing that they will not easily concede or withdraw.
Most voices in the market still believe that the Stargate team and LayerZero have already reached an internal agreement, and even if Wormhole raises its bid, it will likely just force LayerZero to spend a bit more money, with Stargate ultimately still being integrated into LayerZero, without any dramatic reversal.
Therefore, in the coming days, whether the Stargate community decides to pause the original vote and initiate a new competitive process will be a key point of interest.
Interest Analysis of All Parties
STG Holders: Faced with a difficult choice: accepting LayerZero's proposal would grant them ZRO ecosystem rights, but the $0.1675 acquisition price has been questioned as too low. The ideal scenario would be for competition to raise the price, but ultimately still have LayerZero acquire it, ensuring ecological synergy while receiving a higher price. It is worth noting that many STG holders are optimistic about the LayerZero ecosystem, leading to a higher support rate.
Stargate Team: The core team has a close relationship with LayerZero, and an acquisition by LayerZero would be the most secure option, allowing them to continue developing in a familiar environment. If Wormhole takes over, the team's retention is uncertain, and they may leave due to cultural mismatches, affecting project continuity.
LayerZero Team: A successful acquisition by LayerZero would bring multiple benefits such as technical integration, financial enhancement, and market position consolidation, with ZRO already rising 15% reflecting market expectations. The risk is that competition may drive up acquisition costs, diluting existing equity. However, LayerZero is basically determined to fully retain this core asset.
Wormhole Stakeholders: Regardless of the outcome, they stand to gain: a successful acquisition would create a cross-chain giant, while failure could still weaken a competitor, enhance their own reputation, and test the opponent's limits. This is a strategic game of "advancing when possible and retreating when necessary."
Ordinary Users: Short-term impacts are limited, but in the long term, different ownership will affect product forms. LayerZero's acquisition may lead to more integrated services (completing information cross-chain and asset cross-chain on one platform), while Wormhole's acquisition could merge "liquidity pools" and "lock-and-mint" bridge models. However, the trend of increasing concentration in cross-chain bridges presents both efficiency advantages and centralization risks.
Other Competing Projects: This merger battle has a demonstration effect on other cross-chain bridges. Axelar and Synapse may also become acquisition targets in the eyes of major players. They may seek to strengthen their defenses to avoid being acquired at a low price; or consider alliances with larger platforms for self-preservation.
Most Likely Outcome
Considering the close "blood is thicker than water" relationship between LayerZero and Stargate, along with the fact that LayerZero's amendment has already received 88.6% support, the most likely outcome is that Stargate will ultimately be acquired by LayerZero. The historical ties, technical integration, and strategic synergy between the two teams are advantages that external bidders find hard to match.
However, Wormhole's intervention is not without effect. It has successfully publicized the issue of "undervaluation," putting pressure on LayerZero in public opinion. Therefore, LayerZero may appropriately raise the offer or add other incentives in the final proposal.
Industry Significance: A Sign of a Mature Market
This event marks the transition of the crypto industry from a technology-driven "wild era" to a "mature era" where strategic integration and commercial competition coexist.
We have observed three important trends:
The Era of "Protocol Mergers and Acquisitions" has Arrived: In the future, competition between projects may no longer be limited to writing code and attracting users; there will be real monetary acquisitions, and even "hostile takeovers," similar to the traditional business world.
DAOs are No Longer Just for Show (at least not this time): We have seen the power of the community. A well-organized DAO can indeed secure a voice and benefits for itself in multi-million dollar business decisions.
Balancing Ideals and Reality: The tension between decentralized ideals (initially Stargate operated independently) and the need for commercial efficiency (now needing to merge into one) has become more apparent. The ideal of decentralization is beautiful, but in the face of brutal market competition, sometimes centralized integration and decision-making is a reluctant but realistic choice for efficiency and survival.
Conclusion
Regardless of who ultimately acquires Stargate, this acquisition saga will become a classic case of how the crypto world responds to traditional business strategies. It reminds us that as the industry matures, mere technological innovation is no longer sufficient; capital operations, governance wisdom, and strategic vision are equally important.
The battle for cross-chain bridges is still ongoing, and we await the final outcome. In any case, it has already made a significant mark on the development of the entire industry. It is like a crossroads, signaling that we are moving from an era of free exploration to a new phase of giants standing tall and forming alliances.
This article is based on publicly available information and analysis, and does not constitute investment advice. Cryptocurrency investment carries significant risks; please make cautious decisions and do your own research (DYOR).
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