LayerZero proposed the acquisition of StarGate, with a daily pump of over 30%: strategic integration or low-cost land grabbing? A game between DAO and capital.

Written by: Tia

At 1 AM on August 11, 2025, the cross-chain communication protocol LayerZero announced a significant proposal: to acquire all circulating tokens of the cross-chain bridge StarGate (STG) for 110 million USD and incorporate StarGate into its ecosystem. Upon release of the news, the LayerZero token ZRO surged over 30% on that day.

If this transaction is successfully completed, it will become the most representative "parent-child merger" case in the cross-chain field. However, behind the seemingly collaborative narrative, this acquisition has sparked a strong backlash within the StarGate community, with some coin holders even describing it as "low-price land grabbing" and "governance kidnapping."

According to the plan announced by LayerZero:

The acquisition price is $0.1675 per STG, exchanged at a ratio of 1 STG : 0.08634 ZRO (based on a current ZRO price of $1.94);

StarGate DAO will be dissolved, and all protocol surplus will be used for ZRO buyback and burn;

Long-term staked veSTG can be exchanged for liquid STG at the same ratio, with no additional premium.

The community discussion period is only 7 days, followed by a 3-day Snapshot vote, which requires a 70% approval rate and 1.2 M veSTG participation to pass.

The motivation behind capital integration

In terms of execution, this is a "one-time delivery" style merger: LayerZero exchanges all STG at a fixed price, completely taking over the protocol and revenue streams, absorbing StarGate's independent governance, token economic model, and dividend mechanism into the ZRO system.

StarGate is currently the most widely used cross-chain bridge, with a cumulative transaction volume exceeding $70 billion, and it utilizes the Hydra mechanism to help new chains quickly attract liquidity. After the acquisition, LayerZero can not only bind the underlying communication protocol with the cross-chain liquidity entry but also directly reach end users, forming a "underlying communication + application layer cross-chain" closed loop.

Remove STG and inject StarGate earnings into ZRO buyback, which can strengthen the value capture logic of ZRO and reduce market distraction from the multi-token system - this is beneficial for secondary market performance and future financing valuation.

Concerns of the opposition

However, the opposition points out that the pricing of this proposal severely underestimates StarGate's long-term potential and may even be related to LayerZero's future asset consolidation for a U.S. listing.

A total valuation of 110 million USD is considered the bear market anchor price. A few months ago, the StarGate Foundation provided an STG valuation of $0.60/token in its internal bull market model, which was before the passage of the U.S. "GENIUS Act". According to U.S. Treasury Secretary Bessent's forecast, after the implementation of this act, the global stablecoin market will jump from $250 billion to $3.7 trillion, while the velocity of money (the basis for StarGate's fees) will grow even faster.

During this period, the number of integrations, transaction volume, and long-term stakers' yields of StarGate have all seen significant growth. The team has also actively waived OFT traffic fees to promote ecological expansion. With the upcoming entry into the Intents market, its profitability will further improve. Meanwhile, market analysts like Tom Lee have raised their potential price expectations for Ethereum to over $10,000, which means the expected value of the protocol's treasury assets is also on the rise.

Against this backdrop, the opposition believes that the acquisition price neither reflects growth potential nor provides a reasonable acquisition premium, especially given that it was proposed before the potential altcoin bull market (ALTSZN) arrives, making the timing intriguing.

Moreover, this proposal will flatten the rights of long-term stakers. veSTG holders previously enjoyed a 50/50 revenue sharing, with a maximum staking period of up to 4 years. In this acquisition, there is no premium compensation for liquid STG, and they also lose future dividend rights.

7 days of discussion period + 3 days of voting period have also been criticized as a "lightning war," depriving the community of time to negotiate for better conditions and not introducing other potential buyers for bidding. Some even remind that this is a typical negotiation "anchoring strategy"—first throwing out a very low offer, then using a slightly higher price as a "sweetener" to cover up the unfairness of the initial proposal.

Strategic integration or value transfer?

From a strategic perspective, the integration of StarGate into LayerZero can indeed bring about a centralization effect in terms of technology, users, and token value. For ZRO holders, this is almost a risk-free positive: more income, clear buyback logic, and stronger narrative cohesion.

But for STG holders, especially long-term stakers, this feels more like a transfer of value: deprivation of profit rights, lack of acquisition premium, and disappearance of DAO governance rights.

The opposition suggests that the acquisition should not be rushed before the market cycle following the implementation of the GENIUS Act has fully unfolded. They call for StarGate DAO to extend the negotiation period, introduce other potential acquirers including Coinbase, Robinhood, Circle, and Tether for competitive bidding, and consider hiring an investment banking team to secure a higher valuation for the DAO.