LayerZero's Stargate Acquisition: Inside the 97% Vote and Who Really Wins

When proposals pass with over 97% support, something remarkable is happening—but not always in the way everyone expects. LayerZero’s acquisition of Stargate, currently backed by 97.09% voter approval, is a textbook case of how even unanimous decisions can leave some stakeholders feeling shortchanged.

The Deal on the Table

Here’s what’s happening: LayerZero is moving to acquire Stargate’s token reserves and treasury, with voting concluding on August 24. The exchange rate? 1 ZRO for 0.08634 STG, valuing each STG token at $0.1675—a 16% premium over the treasury’s $0.1444 per token baseline. On paper, this looks like a straightforward merger: combine two protocols, integrate token economics, and strengthen LayerZero’s cross-chain positioning.

The numbers are modest but real. Stargate generates roughly $1.74 million annually in protocol fees (per DefiLlama data), which will flow into ZRO buybacks post-acquisition. Any future revenue becomes a tool to reduce ZRO’s circulating supply.

The Winners: It’s Clearer Than You’d Think

ZRO token holders emerge as the primary beneficiaries. Here’s why: they’re acquiring an established protocol at a controlled cost using their own token, which simultaneously:

• Increases ZRO holder count without massive capital expenditure
• Locks in predictable revenue streams that will actively reduce token supply
• Eliminates a competitor and consolidates cross-chain liquidity under one umbrella

For LayerZero as an entity, the math works too—they’re absorbing $1.74M in annual revenue plus Stargate’s infrastructure with minimal cash outlay.

The Uncomfortable Question: What About STG Holders?

Here’s where the 97% approval rate masks real friction.

STG token holders—especially those who locked their tokens as veSTG—are staring at an awkward choice: accept a 16% premium (which hardly feels generous given ZRO’s recent price momentum) or miss the boat entirely. The original push for a 1:1 exchange rate essentially demanded LayerZero pay STG’s full FDV, which neither side could justify economically.

Instead, veSTG holders received partial compensation: six months of Stargate’s future revenues. At ~$1.74M annually, that’s roughly $0.87M distributed across all locked STG holders—meaningful in absolute terms but diluted when divided. For someone who locked tokens expecting Stargate to be an independent protocol, this feels like settling.

Why This Matters Beyond the Numbers

The real tension isn’t about math—it’s about expectations. STG holders believed they were supporting a protocol that could scale independently. A 95% drop from historical highs and only $2M in annual revenue proved that theory wrong. LayerZero’s acquisition isn’t predatory; it’s realistic.

But perception matters in crypto. If LayerZero is seen as acquiring Stargate on favorable terms while leaving STG holders with minimal upside, the precedent is set: building on LayerZero’s infrastructure has hidden risks. New developers and stakeholders will recalculate their commitment.

The Path Forward

This isn’t a catastrophic outcome for Stargate. Lack of capital and limited runway meant the protocol was stalling anyway. LayerZero’s backing provides tech, stability, and growth potential that Stargate couldn’t generate alone.

Yet LayerZero faces a retention problem. The team should reconsider whether the current compensation structure is worth the goodwill cost. Better revenue-sharing arrangements for STG and veSTG holders wouldn’t erase the deal but would signal that LayerZero values continuity over extraction.

With 97% voting to approve, LayerZero has its acquisition. The harder question—whether it has earned the trust to do it well—remains unanswered.