Testnet, the longest in history, is now over. Berachain’s L1 Blockchain is launching today its BERA Token and mainnet.
They are all very happy! It was obvious. Berachain attracted $3.1 Billion in Liquidity on its Boyco pre-launch liquidity platform, making Berathe 8th largest TVL chain.
Bera’s liquidity surge is due to its complex structure “proof-of-liquidity” (PoL) consensus mechanism.
This is the essence of it.
The average Proof-of-Stake network (PoS), has an all-purpose native coin (e.g. The native tokens are usually ETH (or SOL).
Berachain has split this token in a dual model token:
- BERA is used as a gas, and also for the validator stake.
- BGT is a non-transferable but inflationary governance token.
Validators determine which Dapps will receive BGT emission. These dapps are interacted with by users (e.g. You can also earn BGT by providing liquidity.
What makes users choose to use a token which is non-transferable? The BGT token is a veTokenomics style bribe.
Delegating BGT gives validators governance authority to send future BGT emissions (hopefully to the dapp that you are staking liquidity on) to any liquidity provider.
Berachain is unique because it creates a relationship directly between block validators and liquidity providers.
Validators stake bonds (e.g. ETH/SOL is used to secure the network. Validators actively decide which Dapps/LPs are to be rewarded BGT as a result of their capital provision on Berachain.
The kicker is this: Calling the BGT “non-transferable” It is misleading, because BGT tokens can irreversibly be burned in a ratio of 1:1 to BERA. The BERA token will always reflect market value.
Berachain, in contrast to other veTokenomics’ models such as Curve and Aerodrome that lock up your account for a number of years, allows you the freedom to leave whenever you please. However, the withdrawal is permanent.
It’s not possible to buy your way in again like with CRV. (BGT, on the other hand, is a token that has a soul bound). Then you’d need to do it all again.
The early rush of liquidity in Berachain may be due to this. Bera’s tokenomics are excellent at solving the cold-start TVL problem, because validators — who are already committed participants in the ecosystem — are internalizing the risks of liquidity provision, as opposed to the traditional playbook of dapps using their own native tokens.
It also creates a flywheel-effect that favors the early Berachain participants over those who join later.
It may also explain why Bera has made the unusual choice to enshrine native applications — like its AMM DEX (BEX), money market (Bend) and perps DEX (Berps) at launch — as opposed to most L1s which outsource these efforts to third-party builders.
As you get older, you will have a larger BGT war chest, and therefore, more power to limit future BGT emission.
Curve wars are happening again. Now it is happening at the Berachain Protocol level
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