What is Berachain (BERA)?

Deep Dive

1. Purpose & Value Proposition

Berachain aims to solve the "cold start problem" in DeFi by directly incentivizing liquidity providers through its novel Proof-of-Liquidity (PoL) mechanism. Unlike traditional chains where stakers only secure the network, Berachain validators earn rewards proportional to their contribution to ecosystem liquidity. This creates a flywheel where protocol growth directly benefits network participants.

2. Technology & Architecture

Built using BeaconKit (a Cosmos SDK fork), Berachain combines:
- EVM-identical execution: Full compatibility with Ethereum tools and dApps
- Triple-token design:
- BERA: Gas token with native staking yield (post-PoL v2 upgrade)
- BGT: Non-transferable governance token earned via liquidity mining
- HONEY: Native stablecoin for DeFi operations
The chain processes transactions through a delegated proof-of-stake system enhanced by liquidity metrics.

3. Tokenomics & Governance

The PoL v2 upgrade (July 2025) fundamentally reshaped incentives:
- 33% of protocol emissions now flow to BERA stakers
- BGT retains governance power but sees reduced direct rewards
- Automatic buybacks convert non-BERA incentives into BERA, creating deflationary pressure
Validators are selected based on both staked BERA and delegated BGT, creating layered alignment between network security and ecosystem health.

Conclusion

Berachain positions itself as Blockchain 3.0 by embedding DeFi incentives at the protocol level through its liquidity-first consensus model. With upcoming upgrades to BeaconKit aiming to burn 1M BERA annually and enable institutional-scale DeFi, the chain seeks to balance speculative activity with real-world asset integration. Can its "barbell strategy" – bridging Web2 businesses and on-chain speculation – sustainably scale while maintaining crypto-native values?