Introduction to Berachain

Image:https://www.berachain.com/

Berachain is an EVM-compatible L1 public chain built on the Cosmos SDK. It originated from the Bong Bears NFT series in 2021, initiated by a senior OG in the DeFi space. The project collaborated with the Polaris team during development to ensure EVM compatibility and adopted the innovative Proof of Liquidity (PoL) consensus mechanism to promote the development of the DeFi ecosystem by incentivizing on-chain liquidity.

In terms of financing, Berachain has completed two rounds of financing with a total amount of 142 million US dollars. Among them, the Series A financing in 2023 raised 42 million US dollars, led by Polychain Capital, with participation from OKX Ventures, Hack VC, and other institutions. In 2024, the Series B financing raised 100 million US dollars, led by Brevan Howard Digital and Framework Ventures, with participation from Polychain Capital and other institutions. In the early morning of February 6, 2025, Berachain announced the launch of token airdrop query. Due to the high financing amount and market attention, the news of Berachain token query quickly sparked discussions in the community.

Berachain Technology Architecture and Features

EVM Identical: Fully compatible with Ethereum

Berachain adopts an execution environment that is fully compatible with the Ethereum Virtual Machine (EVM), supporting Ethereum’s smart contract architecture and toolchain, such as Geth, Reth, Erigon, Nethermind, etc. This means that developers can migrate dApps from Ethereum without modifying the code, reducing the ecological adaptation cost.

Advantages of EVM Identical:

• Native compatibility: supports all Ethereum RPC interfaces without the need for additional adaptation.
• Seamless upgrade: When Ethereum upgrades, Berachain can also be synchronized updated, for example, Dencun upgrade can be directly applied.
• Efficient Execution: With an optimized consensus mechanism, it provides better execution efficiency than traditional PoS solutions.

BeaconKit: Modular Consensus Engine

BeaconKit is a modular EVM consensus framework developed by Berachain, with advantages including:

• Single Slot Finality (SSF): Compared to Ethereum’s 13-minute final confirmation time, Berachain only requires a single slot.
• Parallel block proposal: Through the optimistic block building mechanism, the block confirmation speed can be increased by 40%.
• Highly scalable: supports different functional modules such as Rollup, data availability layer, etc.

Analysis of Proof-of-Liquidity (PoL) Consensus Mechanism

The PoL mechanism is the innovative core of Berachain, aiming to solve the problem of the disconnect between stakers and ecosystem application developers in the PoS mechanism.

Difference between Economic Model and PoS

Traditional PoS mechanisms mainly rely on stakers obtaining block rewards by locking up their coins, while PoL directly affects the security and governance weight of the blockchain through liquidity providers. The core difference is as follows:

Dual Token Model: BERA and BGT

Berachain uses two tokens, BERA and BGT, which serve different functions:

• $BERA (core Gas Token):
  • Responsible for paying network transaction fees (Gas)
  • As a staked token for validators, it determines the probability of block proposals.
  • With an inflation model, approximately 10% is issued annually.
• $BGT (governance token):
  • Empower governance through providing liquidity.
  • Optimize the incentive allocation for validators and promote ecological development.
  • Can be used to vote on protocol changes.

How does PoL incentivize ecosystem development?

PoL achieves decentralized incentive allocation through Reward Vaults.

1. Users provide liquidity to the protocol and receive corresponding LP assets.
2. Stake LP assets to Reward Vaults and receive $BGT.
3. Validators adjust block rewards distribution based on the staking amount of $BGT.
4. Projects can attract liquidity to join the ecosystem by providing additional rewards.

Image:https://docs.berachain.com/learn/what-is-proof-of-liquidity

BERA Token Economic Model Analysis and Market Performance

Token Distribution

The initial supply of BERA is 500,000,000, and the total supply is unlimited. The specific distribution is as follows:

• Core Contributors (16.8%): 84,000,000 BERA, allocated to the Big Bera Labs team and advisors.
• Investors (34.3%): 171,500,000 BERA, allocated to seed round, Series A, and Series B investors.
• Community Allocation (48.9%):
  • Airdrop (15.8%): 79,000,000 BERA, allocated to testnet users, NFT holders, etc.
  • Future Community Incentives (13.1%): 65,500,000 BERA, used for ecological application development subsidies.
  • Ecosystem and R&D (20%): 100,000,000 BERA, used for developer support and liquidity pool.

Image:https://docs.berachain.com/learn/pol/tokens/tokenomics

Token release mechanism

• Initial 9.5% Token unlocking for ecological growth, developer tools, etc.
• The remaining tokens will be unlocked at a cliff period of 1 year with 1/6 released, and the remaining tokens will be linearly released over the next 24 months.

Image:https://docs.berachain.com/learn/pol/tokens/tokenomics

The BERA token is now listed on the Gate.io spot trading area, with a current circulating market value of around 8.7 billion US dollars (as of February 7, 2025). The new coin has experienced significant fluctuations since its listing, so please trade cautiously and be aware of the risks. Click to trade:https://www.gate.io/trade/BERA_USDT

Berachain ecosystem development and prospects

As an innovative blockchain in the DeFi field, Berachain’s future growth momentum mainly comes from the following aspects:

• Layer2 Ecological Integration: Support Rollup, improve throughput and transaction efficiency.
• Liquidity mining mechanism optimization: Improve capital utilization by dynamically adjusting $BGT rewards.
• Cross-chain interoperability: Collaborate with other EVM chains, Bitcoin, Cosmos, and other ecosystems.

Berachain’s Position in the DeFi Competitive Landscape

Berachain differentiates itself from existing public chains through the PoL mechanism:

Conclusion

Berachain binds network security with liquidity providers’ interests through the PoL mechanism, forming a unique token economic model. In the future, as the DeFi ecosystem continues to expand, Berachain is expected to become a new paradigm of on-chain finance, bringing far-reaching impact to the blockchain industry.