Wormhole counters LayerZero's $110 million bid to buy Stargate, asks to pause voting period

The Wormhole Foundation is looking to counter an offer made by cross-chain messaging rival LayerZero to purchase Stargate, representing the latest move in an ongoing saga to acquire the prominent blockchain bridge that could lead to a bidding war.

Earlier this month, LayerZero put forward a $110 million proposal to absorb the Stargate ecosystem and merge it into its tech stack to streamline both protocols. The merger would convert all STG tokens into ZRO, and use Stargate revenues — totaling nearly $1 million over the past three months — to buy back LayerZero tokens.

The move makes sense given that Stargate Finance was developed by the same team that created the LayerZero protocol, and that the two companies share cofounders.

As part of the plan, all circulating STG (including staked/voting STG) would be swapped for ZRO at a ratio of 1 STG per 0.08634 ZRO, reflecting a value of $0.1675 per STG and $1.94 per ZRO. Further, the Stargate DAO would be dissolved.

"This offer is designed to accelerate both Stargate and LayerZero, giving Stargate the resources to ship on an aggressive roadmap that expands its prerogative outside of bridging, while tying an incredible, revenue-generating protocol that touches the end-consumer deeper into the LayerZero ecosystem," LayerZero’s proposal read.

However, on Wednesday, Wormhole came out with a competing bid, arguing that Stargate’s holders “deserve a more competitive process.” The move comes amid a seven-day community voting period, which Wormhole is calling to pause to reassess Stargate’s true valuation.

In short, Wormhole argues that LayerZero has lowballed Stargate, which not only has valuable future cashflows (it saw $4 billion in bridging volumes in July), but also a treasury holding $92 million in stablecoins and ether — not to mention its STG holdings.

Stargate, built on LayerZero, is a decentralized bridge that enables seamless cross-chain transfers of native assets like USDC, USDT, ETH, and BTC across over 80 blockchains. Wormhole is a similar blockchain bridge that uses a more archaic lock-and-mint mechanism.

LayerZero’s "doesn’t create a compelling offer, which values Stargate’s ongoing business at an unreasonably low number,” the Wormhold team wrote. “To maximize value for Stargate token holders, the Wormhole Foundation respectfully requests that the ongoing Snapshot be suspended for five business days to allow the Wormhole Foundation sufficient time to finalize our offer."

It is unclear how this will develop or how much Wormhold intends to offer. Voting on the LayerZero acquisition proposal was initially scheduled to close on Aug. 24.

Wormhole put in a last-minute counter-bid against LayerZero to acquire Stargate, which the LayerZero team originally launched,” Dragonfly’s Haseeb Qureshi said on X. “This while in the middle of $STG holders voting on the LayerZero buyout. Have we entered a protocol M&A bull market? This is gonna be fun.”