- A Stargate DAO proposal wants to halt negotiations over the sale of the crypto bridge.
- It comes after the LayerZero Foundation proposed acquiring Stargate on Sunday.
- The proposal also suggests Stargate solicit counter offers from Binance and Circle, among others.
Halt the sale.
That’s the demand of an emergency proposal on the Stargate governance forum. It’s asking the crypto collective to stop negotiations over the sale of the crypto bridge until it has solicited counter offers and established new processes to ensure neutrality.
It comes after the LayerZero Foundation, a nonprofit that supports the LayerZero cross-chain messaging protocol, offered to buy the Stargate protocol on August 10 for around $138 million. The unsolicited bid would dissolve the DAO and convert Stargate’s STG token to LayerZero’s ZRO token.
In an emergency proposal on Tuesday, Stargatefan, a pseudonymous Stargate governance participant, said that the DAO should appoint a representative for the potential sale of the protocol that has no connection to either the Stargate Team or LayerZero to ensure fairness.
The proposal also recommends the DAO retain an independent investment bank and legal counsel, as well as solicit counter bids from Binance, Solana, Circle, Tether, and 10 largest crypto venture capital funds, and other bridging providers to ensure LayerZero’s acquisition offer is competitive.
“None of the above should be objectionable to LayerZero or the Stargate team,” Stargatefan said in the proposal. “This process will ensure the community does not feel cheated and can join the LayerZero community knowing the result was fair and no better bids existed.”
Governance participants in decentralised autonomous organisations, or DAOs, often choose to remain pseudonymous to avoid bias and prevent bribes and governance attacks.
Stargatefan isn’t the only one to suggest soliciting other bids.
Exahash, a pseudonymous governance participant, also suggested Stargate DAO reach out to US crypto exchange Coinbase, fintech app Robinhood and stablecoin issuer Circle for bids.
The LayerZero Foundation did not immediately respond to a request for comment.
Conflict of interest
The pushback comes as the relationship between Stargate and LayerZero raises concerns over a potential conflict of interest.
Both projects were founded by the same firm, LayerZero Labs. Additionally, many members of the LayerZero Foundation and LayerZero Labs own significant amounts of Stargate’s STG token.
“One team. One focus. Millions in fundraising and token allocations. One massive self-dealing conflict of interest,” Robo, a pseudonymous Stargate governance participant, said in response to the acquisition proposal.
In response, the LayerZero Foundation said it has expressly forbidden Foundation and Labs’ members from voting on the Stargate acquisition proposal.
“We have also not rallied to individual or large holders to take a specific position,” the Foundation said.
While there are numerous critics of the LayerZero Foundation’s offer, a growing number of Stargate DAO members say they support it.
An acquisition would simplify the relationship between the two projects, and give Stargate more resources to pursue a broader mandate, the LayerZero Foundation said.
Yet even those who support a merger say the $138 million price the acquisition values Stargate at is inadequate.
“I don’t understand why STG is so undervalued, even by LayerZero itself,” Coinomy, a pseudonymous governance participant, said. “It’s one of the most successful apps in crypto.”
Stargatefan’s emergency proposal, if it moves forward to a vote and passes, could help alleviate concerns over a conflict of interest and the protocol’s value.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
