The LayerZero Foundation has proposed a $110 million acquisition of Stargate Finance, aiming to merge its token economy into LayerZero's ecosystem and enhance cross-chain infrastructure.

As part of the proposal, all STG tokens would be exchanged for ZRO tokens at a fixed rate of 0.08634 ZRO per STG, effectively retiring STG as a standalone governance and rewards token.

Following the merger announcement, both STG and ZRO tokens experienced significant market reactions, with prices increasing by 17% and 22%, respectively, reflecting optimism around the deal.

In the 24 hours after the announcement, LayerZero's token rose over 23%, while Stargate's token gained approximately 16.5%, according to CoinGecko.

However, concerns have been raised by current STG holders regarding their rights, with some arguing that the swap lacks significant advantages and does not include the revenue sharing system currently available to them.

Some community members are advocating for improved terms or alternative incentives to compensate for the loss of staking income that would result from the merger.

Community reactions are mixed; while some believe that managing two tokens could dilute focus, others see the merger as an inevitable step forward.

The proposal also aims to dissolve the Stargate DAO, ceasing its operational role, and redirect any excess revenue from Stargate to buy back ZRO tokens.

Post-merger, Stargate's bridge revenues, which generated $939,000 in payouts to STG stakers over the past three months, would flow directly to the LayerZero foundation.

ZRO holders would benefit from potential buybacks funded by these revenues, while governance and utility would fully shift to the LayerZero token.

A public discussion phase will precede a three-day voting period, requiring a 70% approval threshold from veSTG holders for the proposal to pass.

The proposal is open for comments for a week, after which the Stargate community will vote on the acquisition.