What is Berachain?

Berachain is an EVM-compatible Layer 1 public blockchain built on the Cosmos SDK that utilizes a Proof-of-Liquidity (PoL) consensus mechanism. By incentivizing liquidity, it addresses the liquidity challenges found in DeFi.
Berachain originated as a meme chain connected to the Smoking Bear NFT and can be traced back to the launch of the Bong BERAs NFT series in August 2021. The team, well aware of the importance of liquidity in DeFi, believes that decentralization, scalability, security, and interoperability all rely on liquidity. This insight drove them to design a Layer 1 chain specifically focused on solving liquidity issues — Berachain.

As of February 2025, just before the mainnet launch, its testnet has attracted participation from 240 million addresses, with Total Value Locked (TVL) surpassing $1.6 billion.

Gate.io Now Supports $BERA Spot Trading

Why is Berachain Needed?

The current public chain sector faces two major challenges:

1. Fragmented Liquidity:
   Under traditional PoS mechanisms, staking and liquidity compete for the same tokens, leading to fragmented liquidity and low capital utilization. Additionally, governance power tends to concentrate in the hands of whales, undermining decentralization.
2. Homogenized Competition:
   Most new public chains focus on technical metrics (such as TPS and modularity) while neglecting user engagement and ecosystem diversity. In multi-chain ecosystems, isolated assets restrict the synergistic effect of DeFi, often resulting in the proliferation of “ghost chains.”

Berachain addresses these issues by:

• Directly linking liquidity providers with network security, incentivizing users to lock assets in on-chain liquidity pools. Validators must provide liquidity to participate in consensus, ensuring that network security strengthens as liquidity increases.
• Allowing users to stake assets (e.g., ETH, BTC, stablecoins) to earn the governance token $BGT while still retaining asset usage (such as for lending and trading), achieving the concept of “liquidity as yield.” This approach improves on-chain capital utilization and attracts more users and projects to the ecosystem, creating a positive feedback loop.
• Furthermore, Berachain leverages Cosmos’ cross-chain communication protocols to enable seamless asset transfers with other blockchains (e.g., Ethereum, Solana), further integrating liquidity.

Proof-of-Liquidity (PoL)

Proof-of-Liquidity (PoL) is an extension of Proof-of-Stake (PoS) that realigns economic incentives among validators, applications, and users. This mechanism employs a dual-token model: one token ($BERA) ensures chain security, while the other token ($BGT) is used for governance and rewards.

PoL Components

Security Layer ($BERA)
Berachain’s active validator set (i.e., the validators participating in consensus) is determined by the amount of $BERA staked by validators. There is a minimum staking requirement of 250,000 $BERA and a maximum cap of 10,000,000 $BERA. The top validators by staked amount make up the active set. Within this set, a validator’s probability of proposing a new block is proportional to the amount of $BERA they have staked—the more $BERA staked, the higher the likelihood of being chosen to propose a block.
Reward Layer ($BGT)
The amount of $BGT block reward a validator receives is determined by their “Boost,” which is the percentage of $BGT delegated to that validator relative to the total $BGT delegation across all validators. A validator’s boost increases as $BGT holders delegate to them.

PoL Lifecycle

1. Validator Onboarding
   • Prospective validators begin by staking $BERA as a “bond.”
   • Based on the staked amount, validators have a proportional chance of being selected to produce new blocks, receiving a base reward along with additional rewards based on their boost.
2. Reward Distribution
   • After collecting the base $BGT rewards for themselves, validators allocate the remaining variable $BGT rewards to designated reward vaults to earn extra incentives.
3. Liquidity Provision
   • Users can provide liquidity on platforms such as BeraSwap and receive receipt tokens as proof of their contribution.
   • These receipt tokens can then be staked in reward vaults, allowing users to earn $BGT rewards.
4. Delegation Mechanism
   • Users holding $BGT can delegate these tokens to validators, increasing the validators’ “Boost.”
   • The more delegation a validator receives, the higher their boost, resulting in greater $BGT rewards when they propose blocks. This creates a positive cycle, encouraging more participation.

PoL Ecosystem Participants

By integrating Berachain’s native network rewards among all ecosystem participants, PoL achieves alignment among:

• Validators: They need $BGT delegation to maximize block rewards and must efficiently direct rewards into reward vaults to earn additional incentives, thereby attracting further boost.
• Protocols: They compete for $BGT rewards by offering attractive incentive rates in their reward vaults.
• Users: They earn $BGT by providing liquidity, which they can then delegate to validators to maximize returns.

Tri-Token Economics

Berachain’s three-token model is designed to create a balanced ecosystem. Each token serves a different purpose, and together they enhance the network’s liquidity, utility, and decentralization. Their interactions are as follows:

• $BERA – Gas Token:
  Every transaction on Berachain, whether it’s a transfer, a lending operation, or an interaction with a DeFi protocol, requires $BERA for gas fees. Users can earn $BERA by validating transactions or by providing liquidity on the Berachain platform.
• $BGT – Governance Token:
  Used for network governance, $BGT can only be obtained by staking $BERA. Liquidity providers on Berachain earn transaction fees in $BGT. Holders have voting rights in network governance and can propose changes, vote on upgrades, and adjust PoL parameters.
• $HONEY – Stablecoin:
  Validators and liquidity providers receive $HONEY as a reward for securing the network. This incentivizes their contributions to liquidity pools. The issuance of $HONEY is regulated to ensure a sustainable rewards system that aligns with the network’s liquidity demands.
  

Liquidity providers earn $BGT by contributing to the network’s liquidity, thereby enhancing its security. At the same time, they can use $HONEY to mitigate volatility risks in their liquidity pools, making participation more stable and predictable. Validators benefit from both staking $BERA and receiving $BGT delegation, creating an incentive structure that aligns all participants with the network’s success.
This interconnected mechanism ensures that validators, liquidity providers, and governance token holders all have a vested interest in the ecosystem’s health. As liquidity grows, the network becomes more secure, and as governance becomes more active, the network can evolve in line with participant needs.

Funding Background

April 20, 2023: Berachain completed a $42 million funding round led by Polychain Capital, with participation from Hack VC, Dao5, Tribe Capital, Shima Capital, and others.
June 8, 2024: Berachain announced the completion of a $100 million USD Series B seed round, led by the Abu Dhabi branch of Brevan Howard Digital and Framework Ventures, with additional participation from Polychain Capital, Hack VC, Samsung Next, Laser Digital, among others.

Ecosystem Projects

The Honey Jar

The Honey Jar serves as the entry point to the Berachain ecosystem, responsible for educating users, incubating and promoting ecosystem projects, and facilitating collaborations between various projects. Its website is designed to resemble a computer desktop, with Berachain-related information organized into various “applications.”

Beradrome

Beradrome is the DEX and restaking liquidity market on Berachain, featuring ve(3,3) tokenomics, built-in bribery mechanisms, voting, and other features. The team launched an NFT series called “Tour de Berance” a year ago, which is humorously nicknamed “Beras on Bikes.”

Dolomite

Dolomite is a lending protocol on Berachain where users can stake $BGT as collateral to amplify liquidity mining rewards up to 5 times. It also allows users to hedge against market volatility while amplifying their yield, forming a sustainable leveraged mining ecosystem.

Beramonium

Beramonium is Berachain’s blockchain game. They launched an idle RPG called “Gemhunters,” where players can assign their Beramium Genesis BERAs on missions to collect gems, which can then be exchanged for NFTs from other well-known Berachain projects.

Berachain Tokenomics

Token Distribution:

During the BERA Genesis phase, the total token supply is 500 million, allocated as follows:
Core Contributors 16.8%;
Investors 34.3%;
Community Allocation 48.9%:

• Airdrop 15.8%;
• Future Community Incentives 13.1%;
• Ecosystem and R&D 20%.