The LayerZero/Wormhole Bidding War Shows How to Value a Crypto Business - Ep. 890
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We're seeing that historic, you know, first on chain bidding war for crypto m and a.
I think this adds to the maturity of the space. It's no longer just YOLO or a number go up or, you know, when token or air drops. It's how can we analyze these things from a fundamental level and actually apply traditional multiples to them to make sense of what the valuation could be.
This week, crypto witnessed something new, the first on chain takeover battle. LayerZero offered $110,000,000 to buy Stargate, the bridge that it originally built. Just as the vote was starting, competitor Wormhole jumped in, asking the Dow to hold off so it could make its own bid. This raises serious questions. How do we value on chain businesses? Is this really worth a $110,000,000? Is it less or more? And what does this signal about the coming wave of mergers and acquisitions in crypto? Joining me are David Nage, portfolio manager at Arca, and Lawson Bay, an m and a adviser at RelayZero, to
It's great to be with you again, Laura.
Excited to see you.
So as usual, there's some drama going on. Part for the course in crypto, this one is especially juicy and exciting. Omnichain interoperability protocol LayerZero had submitted a proposal to the Stargate DAO for LayerZero to acquire Stargate, which I believe is the most widely used bridge in crypto. LayerZero actually created Stargate, but it had released it into the wild as a DAO. And recently, they proposed to acquire it back with or not acquire it back, but to acquire it with a $110,000,000 purchase of Stargate tokens and what LayerZero CEO Brian Pellegrino said was, what he believed to be t
Sure. So what's what's interesting here is this is the second that I'm aware of acquisition of a pro like, related project by a DAO. So Synthetics SMX back in November actually proposed to acquire Quinta, k e w e n t a token, which was basically a token for the app that they spun out. So the app, the user experience had a token, and then Synthetics, the Abliv protocol decided to reacquire that. At the time, they decided to reacquire that primarily because it was too much administrative to, like, have these two entities and two different teams, and they just wanted to consolidate that. You know
Yeah, I would agree with that. What I've noticed is that, you know, if you look at what the history of Stargate and Layer zero are, is that they were very closely tied together. They were as obviously very significant cross pollination of both of them. So Stargate was dealing directly on LayerZero, it was a cross trading liquidity transfer protocol and bridge. They were part of that world. I think some of the things that we've noticed over the years, you saw this with Polygon too, where Polygon had several different digital assets. They had their original one, then they went to poll and then t
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