Gnosis proposed a merger with xDai, which is a well-known Etheruem side chain for developers. Their coming together is proposed to enable the pooling of technical resources and funds to create a “Gnosis Chain”. The merger would help the two entities stand out in the competitive market for layer 1s. The present competition is causing chains to offer unsustainably huge incentives for users and developers.
However, there is opposition to the planned merger. Those holding STAKE token of xDai feel that such a merger amounts to a hostile takeover by Gnosis. xDai, on the other hand, believes that the infusion of funds by Gnosis will help it stay relevant and not become obsolete.
It was widely anticipated that in 2021, decentralized mergers and acquisitions might finally take off. This has not come to be. The principal reason is that compared to the usual M&A, merging different governance tokens, agreeing on the deal terms, and managing their exchange rates can prove to be difficult.
The two entities said that the merger would help bring together incentives, business development expertise, and an already existing developers’ community to be differentiated in a crowded layer 1s market.
However, the xDai community does not agree that the merger will be beneficial. Long tern STAKE holders feel that the merger is detrimental to their interests. The two entities, however, felt that Stake token holders would not be able to stop the merger and were willing to suitable compensate stakeholders.
Also, many developers of projects on xDai have supported the merger. There, therefore, seem to be competing interests of the developers and the traders. xDai’s team believes that the traders are ignoring the many benefits of the proposed merger and are only focusing on the exchange rate.