LayerZero Proposes Absorbing Stargate in $110M Token Merger, Aiming to Consolidate Cross-Chain Infrastructure

The LayerZero Foundation has unveiled a proposal to merge Stargate Finance into its ecosystem by converting all STG tokens into ZRO at a fixed exchange rate—effectively retiring STG as an independent governance and rewards token.

Stargate, developed by the same team behind LayerZero and sharing several co-founders, plays a central role in cross-chain liquidity infrastructure. The merger would streamline operations under one unified token economy, aligning governance, utility, and value accrual with LayerZero’s ZRO token.

Under the proposed plan, all future bridge revenues generated by Stargate — which totaled $939,000 in the last quarter alone — would flow directly to the LayerZero Foundation. These funds could support ZRO buybacks, enhancing value for token holders and simplifying incentive mechanisms across both platforms.

As part of the consolidation, Stargate’s existing staking program would be discontinued, ending fixed-yield payouts for locked STG holders. Instead, former STG participants would gain direct exposure to the LayerZero economy, though without a dedicated staking yield.

While the move is positioned as a simplification strategy to reduce ecosystem overlap and concentrate token utility, the proposal has drawn mixed reactions from the community. Some STG holders argue the fixed conversion rate undervalues their tokens, especially in light of historic price levels and recurring revenue potential. Others are calling for revised terms or compensatory mechanisms to mitigate the loss of staking income.

If approved, this would mark one of the largest token mergers in the current cycle of layer-1 ecosystem consolidation — potentially setting a precedent for similar governance and asset unifications in the future.

Following the announcement, both ZRO and STG tokens surged more than 20% over the past 24 hours, according to CoinGecko.