LayerZero Moves to Absorb Stargate in $110M Token Swap, Community Pushes Back

TLDR

• LayerZero plans $110M Stargate buyout, swapping STG for ZRO amid mixed reactions.
• Stargate may merge into LayerZero with $110M swap plan, sparking community pushback.
• $110M deal could see STG traded for ZRO, uniting LayerZero’s and Stargate’s networks.
• LayerZero’s $110M Stargate takeover faces backlash over token swap rate concerns.
• ZRO jumps as LayerZero moves to acquire Stargate in $110M token consolidation bid.

LayerZero Foundation has proposed acquiring Stargate in a $110 million deal, aiming to merge their token economies. The plan involves converting Stargate’s STG tokens into LayerZero’s ZRO tokens at a fixed exchange rate. The move has sparked significant market activity but also triggered pushback from Stargate’s community members.

LayerZero Outlines Acquisition Strategy

LayerZero announced the proposal on Stargate’s governance forum, presenting the acquisition as a step to accelerate the development of both protocols. The foundation intends to retire STG and consolidate governance and utility within ZRO. The move would also centralize cross-chain infrastructure under a single token to simplify integration.

The LayerZero Foundation has proposed a $110 million acquisition to the Stargate DAO to purchase the Stargate bridge and its STG tokens, dissolve the Stargate DAO, and exchange STG for LayerZero’s native token ZRO at a rate of 1 STG for 0.08634 ZRO. https://t.co/PGZ7hOT3Xv

— Wu Blockchain (@WuBlockchain) August 10, 2025

The proposed swap rate is 1 STG for 0.08634 ZRO, which would remove Stargate’s existing staking program. Post-merger, revenues from Stargate’s bridge operations would go to LayerZero, potentially funding ZRO token buybacks. The foundation claims this would streamline value accrual and reduce operational overlap.

Stargate allows users to transfer assets across blockchains using native liquidity pools. This system reduces reliance on traditional blockchain bridges, which have faced repeated security breaches. The integration aims to unify operations under one development and governance structure.

ZRO Token Gains Momentum

ZRO surged over 23% in 24 hours to trade at $2.44, according to CoinGecko. The token has rallied nearly 40% over the past week, making it one of the market’s top gainers. Supporters see the proposal as a way to focus network value and expand adoption.

LayerZero leadership has emphasized the need for faster product delivery and a more efficient roadmap. The foundation expects the merger to create a single unified stack for ecosystem integration. They also highlight potential benefits in liquidity and reduced complexity for users and partners.

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However, the plan removes the direct staking yield that STG holders currently receive. Instead, token holders would rely on broader ecosystem incentives tied to ZRO performance. This change has fueled dissatisfaction among some community members.

STG Community Raises Concerns

STG climbed around 16.5% in the past day to just over $0.19 after the proposal. However, many tokenholders argue that the swap ratio undervalues their tokens, given Stargate’s revenues. Some have suggested a 1:1 swap or alternative incentives to offset lost staking rewards.

Over the last three months, Stargate generated nearly $939,000 in payouts to STG stakers. Critics say these returns justify higher valuation in any token merger and point out the absence of a revenue-sharing model in ZRO.

The proposal is open for public comment for seven days before moving to a community vote. If approved, the deal would mark one of the most significant token consolidations in the current cycle. Its outcome could influence how similar cross-protocol integrations are structured in the future.