LayerZero Proposes Stargate Token Absorption in $110M Consolidation Plan
The LayerZero Foundation has unveiled a proposal to consolidate its cross-chain infrastructure by merging Stargate Finance’s STG token economy into its own native asset, ZRO. If approved, all STG tokens would be converted into ZRO at a predetermined rate, effectively phasing out STG as a separate governance and rewards token.
Stargate Finance and LayerZero share deep technical roots and founding teams, making the proposed merger a logical step toward streamlining governance and eliminating redundancy. Under the plan, Stargate’s bridge-generated revenues—which delivered $939,000 to STG stakers over the past three months—would be redirected to the LayerZero Foundation. These funds could then support buybacks of ZRO or be otherwise reinvested within the ecosystem.
The proposal would also sunset Stargate’s existing staking program, ending fixed-yield distributions. Instead, former STG holders would become participants in LayerZero’s broader token economy, though without a dedicated yield mechanism.
LayerZero argues the merger will simplify tokenomics, reduce duplication, and consolidate value within a single governance framework. However, early community feedback has been mixed. Some STG holders are concerned that the proposed swap ratio undervalues their position, especially when factoring in historical price levels and active revenue streams. Others are calling for improved terms or new incentive mechanisms to replace the lost staking yields.
If approved, the move would mark one of the largest token mergers of the current crypto cycle and could set a precedent for how tightly-linked protocols approach consolidation, governance, and value alignment going forward.
Both ZRO and STG tokens surged over 20% following the announcement, according to CoinGecko data.
