The LayerZero Foundation, which supports the cross-blockchain messaging protocol LayerZero, has proposed to acquire the crypto protocol Stargate for $110 million. This news has driven up the tokens associated with both projects.
LayerZero released a post on the Stargate forum on Sunday proposing this acquisition, stating that it "aims to accelerate the development of Stargate and LayerZero, providing resources for Stargate to advance its aggressive roadmap beyond bridging."
LayerZero indicated that it would exchange its native token LayerZero (ZRO) for the platform's token Stargate Finance (STG) at a rate of 1 STG for 0.08634 ZRO.
Stargate was developed and launched by LayerZero in 2022, and if the Stargate community approves the transaction, the platform will return under its umbrella.
Stargate allows users to transfer digital assets across blockchains through liquidity pools, claiming that this method enables native asset transfers without relying on blockchain bridges that have a history of being hacked.
Following the release of LayerZero's proposal, tokens associated with the platform saw double-digit percentage increases that day.
According to CoinGecko, LayerZero's token rose over 23% in the past 24 hours, trading at $2.44, making it one of the biggest gainers in the crypto market over the past day.
Meanwhile, Stargate's token increased by about 16.5% within 24 hours, reaching just above 19 cents, continuing its upward trend from the past week.
Both tokens have significantly dropped from their peaks, with ZRO down 67% from a high of $7.47 in December, and STG down over 95% from a mid-2022 peak of $4.14.
LayerZero co-founder and CEO Bryan Pellegrino posted on X, expressing his desire to "accelerate and deliver quickly."
He stated that the proposal would "help Stargate execute its ambitious roadmap while creating a single stack for anyone integrated into the [LayerZero] ecosystem."
He added that this would also provide STG holders with "more liquid tokens" and give the Stargate community "a clear direction forward, with significantly more resources and a unified direction."
However, the proposal has received a generally negative response from Stargate token holders, with some understanding the need for an exchange but deeming the proposal unfair and not allowing staking.
"These proposals are unattractive. They do not provide any advantages for STG holders, and the revenue-sharing system for STG is not available on ZRO. We can only hold our tokens," wrote a Stargate user.
The user also stated that LayerZero needs to significantly improve the exchange offer, while others called the proposal "fundamentally flawed" and agreed that the exchange conditions should be improved, even suggesting a 1:1 exchange due to "Stargate's revenue situation and protocol potential."
Another user expressed understanding of the exchange need, "because managing two tokens simultaneously is cumbersome and easily confusing." Some users believe "merging tokens makes sense," but also pointed out that the proposal is unfair because STG holders would not be able to continue earning staking rewards.
Stargate stated that the proposal will accept feedback over the next seven days. Subsequently, a decentralized autonomous organization composed of token holders will vote on the proposal.
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Original: “LayerZero and Stargate tokens surge due to $110 million acquisition proposal”
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