- Wormhole challenges LayerZero’s $110M bid, calling it undervalued for Stargate’s assets.
- Stargate’s $4B bridge volume and $345M TVL drive a battle over its DeFi protocol value.
- The bidding war highlights governance and future strategies in cross-chain DeFi growth.
The Wormhole Foundation has announced plans to submit a rival bid to acquire the Stargate protocol, positioning itself against LayerZero’s $110 million offer. The original bid, made by LayerZero on August 11, proposes a full acquisition through a token swap, ZRO tokens in exchange for all circulating STG. In contrast, Wormhole claims the offer undervalues Stargate’s assets and market potential, citing its growing traction in the decentralized finance (DeFi) ecosystem.
Stargate has recently reported a total value locked (TVL) of $345 million and a bridge volume exceeding $4 billion in July alone. Additionally, the protocol controls treasury assets valued at approximately $92 million. Wormhole argues that these fundamentals are not adequately reflected in LayerZero’s bid.
Wormhole stated its intention to offer a significantly higher valuation. The Foundation also requested a brief delay in the current Snapshot vote process to finalize its bid. The Snapshot, opened on August 17, was originally scheduled to conclude by August 24, at 00:15 a.m. GMT.
Governance, Ecosystem Vision at Core of Acquisition Debate
The dispute over Stargate’s valuation and acquisition approach reflects deeper questions surrounding DAO governance, DeFi valuation models, and the future structure of cross-chain infrastructure. Wormhole stated that the present bid does not recognize the total economic and strategic worth of Stargate’s codebase, brand, and personnel. The Foundation believes its competing offer will better reflect the protocol’s current and projected performance.
LayerZero’s proposal, according to Wormhole, seeks to acquire roughly $76.47 million in stablecoins and $15.9 million in ETH alongside Stargate’s revenue stream. The overall value of the sale of ZRO tokens of 110 million indicates that the presence of ZRO payments in the business of Stargate’s future operations and other intangible property is being offered at an extremely low premium. Wormhole’s bid aims to challenge that premise by enabling a competitive process to unlock higher returns for STG holders.
Wormhole has demanded comprehensive documentation of Stargate to achieve transparency, such as asset breakdowns, team information, data owned by the protocol, and a gauge of user engagement. The Foundation feels that such disclosures are essential to a fair consideration and positive negotiation process.
Related: LayerZero to Acquire Stargate, Retire STG in $110M Token Merger
Strategic Implications on the Cross-Chain DeFi Landscape
This acquisition tender is not just a financial one; two opposing strategic visions are pitted against each other. The ex-One LayerZero seems to be interested in adopting a consolidation approach, with an aim at having Stargate under its umbrella and joining its operations. By comparison, Wormhole has a different vision, in which Stargate liquidity aggregation and general user adoption are complemented with the Wormhole multi-chain, thereby increasing ecosystem-level resiliency.
The Wormhole Foundation stated that uniting Stargate and Wormhole would result in stronger revenue potential, improved scalability, and greater institutional adoption. They noted that Stargate’s liquidity structure and proven demand complement Wormhole’s broad integrations across more than 30 blockchains and emerging areas in decentralized finance.
This puts into perspective the way decentralized organizations assess the value of protocols, not only based on treasury size and TVL, but taking into account certain ecosystem impacts, operational efficiency of governance, and scalability of innovation. The result may be a precedent for future inter-chain mergers and decisions on the governance of tokens.
Investor Confidence is shown in the Market’s Response
The outcome can be a precedent for future inter-chain mergers and the choice of governing tokens. On August 20, STG rebounded after declining earlier in the week and rose to some $0.182 on various exchanges, up from $0.1633. This price trend was associated with wider market recovery attempts, with Bitcoin trying to reach once again highs above $114,000, and Ethereum gaining some ground above the $4,300 line.
Regardless of the recent fluctuations, the recovery in STG by over 10% attests to the fact that investors believe in the long-term value of Stargate, making up the difference between the two acquisition bids. The record high of the token is $4.28 reached in April 2022, though the interest in the protocol persists to expand amid this rival acquisitions environment.
