Buyback Proposal of $110 Million for LayerZero Leads to Increased Values of STG and ZRO Tokens
Headline: LayerZero Foundation Proposes $110 Million Buyback of Stargate's STG Tokens
In a significant move, the LayerZero Foundation has put forth a proposal to acquire Stargate's STG tokens in a buyback offer worth $110 million. The offer aims to swap all circulating STG tokens, including staked and voting tokens, for LayerZero’s native ZRO token at a fixed exchange rate of 1 STG : 0.08634 ZRO.
This buyback offer values STG at approximately $0.1675 per token, slightly above its trading price at the time, marking a phase-out of the STG token to consolidate governance under LayerZero's ZRO ecosystem.
The buyback's goals are threefold: to streamline Stargate's operations, enhance cross-chain interoperability, and accelerate Stargate's development by deeply integrating it within LayerZero’s broader blockchain ecosystem. Stargate's extensive history as a leading cross-chain bridge with over $70 billion in transfer volume and significant liquidity bootstrapping is a key asset for LayerZero’s plan to expand interoperability offerings beyond simple bridging.
The community's reaction to the proposal is mixed, with some enthusiasm for the increased resources and integration, balanced by concerns over the loss of Stargate DAO's autonomy and token liquidity. The proposal requires a 70% supermajority approval from the Stargate DAO to pass, indicating some debate within the community about governance centralization versus operational efficiency.
If approved, the autonomous organization will be dissolved, and the bridge, which hosts the majority of Omnichain Fungible Tokens (OFT), will be integrated into the Layer Zero ecosystem. The bridge, launched over three years ago, has reportedly generated over $70 billion in trading volume.
The discussion period for the token buyback proposal will last for 7 days, after which it will be moved to Snapshot for a three-day voting period. If the deal goes through with current prices, each STG token would be worth approximately $0.1961, and each ZRO would be worth $2.42.
The offer conversion is intended to swap all circulating STG (including staked/voting tokens) for ZRO at a ratio of 1 STG: 0.08634 ZRO. Future revenue generated by the bridge will be used in a buyback program aimed at reducing the circulating supply of ZRO.
At the time of writing, STG is up 20% to $0.1965, and ZRO is up 26% to $2.42. However, if the buyout proposal is approved, the cost would increase to approximately $137 million, an increase of $27 million in just under 24 hours. The quorum for the vote is set at 1.2M veSTG (staked STG).
This buyback and token swap reflect a broader blockchain trend where protocol consolidation aims to enhance scalability, reduce fragmentation, and unify ecosystems for better user and developer experiences. The outcome of the vote will be interesting to observe, given the positive price action from the buyout proposal.
- The LayerZero Foundation's proposed $110 million buyback of Stargate's STG tokens includes a swap of all circulating STG tokens for LayerZero’s native ZRO token, marking a move towards consolidating the STG token under LayerZero's ZRO ecosystem.
- The crypto trading community reacts with a mix of enthusiasm and concerns to the proposal, with discussions centering around the loss of Stargate DAO's autonomy and token liquidity versus the benefits of increased resources and integration.
- The buyback and token swap is part of a broader blockchain trend, aiming to enhance scalability, reduce fragmentation, and unify ecosystems for better user and developer experiences in the defi and crypto business.
