Berachain mainnet debuts as BERA token hits $1B market cap

The L1’s unique “proof-of-liquidity” consensus attracted $3.1 billion in pre-deposits

article-image

Berachain and Adobe stock modified by Blockworks

share


This is a segment from the 0xResearch newsletter. To read full editions, subscribe.


The world’s longest testnet is at an end. The Berachain L1 blockchain is officially launching its mainnet and BERA token today.

Loading Tweet..

People are very excited! But that was already obvious. Berachain has attracted a ridiculous $3.1 billion in liquidity on its pre-launch liquidity platform Boyco, making Bera the 8th largest chain by TVL.

Bera’s early liquidity rush is thanks to its somewhat complex “proof-of-liquidity” (PoL) consensus mechanism. 

Here’s the gist of it:

Your average proof-of-stake (PoS) network has a general-purpose native token (e.g. ETH or SOL). 

Berachain splits that token into a dual token model:

  • BERA serves as gas and a bond for validator staking. 
  • BGT is an inflationary but non-transferrable governance token.

The Berachain protocol emits BGT, and validators decide which dapps receive BGT emissions. Users who interact with these dapps (e.g. providing liquidity) can earn BGT.

But why do users want to farm a non-transferrable token? Because BGT is a veTokenomics-style bribe token. 

You delegate BGT to validators, and this gives validators the governance power to direct future BGT emissions to whichever liquidity providers they like (hopefully, to the dapp you’re staking your liquidity on).

Source: Berachain

This, at its core, is what makes Berachain unique: the creation of a direct relationship between liquidity providers and block validators.

On traditional PoS chains, validators merely stake a bond (e.g. ETH/SOL) and secure the chain. On Berachain, validators are actively deciding which dapps/LPs should be rewarded with BGT for their capital provision.

Now here’s the kicker. Calling BGT “non-transferable” is a bit misleading because BGT can be irreversibly burned at a 1:1 ratio to BERA. This means market values inevitably show up in the BERA token.

In contrast to the multiyear lockups on other veTokenomics models, such as Curve’s or Aerodrome’s, Berachain lets you exit when you like. But the exit is permanent.

You can’t buy your way back in like with CRV (BGT is a soulbound token). You’d have to farm BGT all over again.

This may explain Berachain’s early liquidity rush. 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. 

But it also produces a flywheel effect that heavily privileges early participants in the Berachain ecosystem over later ones.

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.

The earlier to this game you are, the bigger warchest of BGT you’ve already built, which in turns means the largest power you have to control future BGT emissions.

It’s the Curve wars all over again. Except now it’s taking place at the Berachain protocol level


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

BWR analyst Carlos Gonzalez Campo explains the consequences of SOL inflation and transfers lost to “leaky buckets”

article-image

Empire co-host Santiago Santos makes the case that memecoins have actually helped push infra forward…just not in the way you think

article-image

A16z Crypto lists seven buckets for tokens and recommendations for how to regulate them, in a filing submitted to the SEC

article-image

New model aims to resolve trading inefficiencies with a single execution layer and market maker changes

article-image

Investors navigating BTC face short-term unpredictability, influence from other markets

article-image

The GENIUS Act aims to establish regulatory guidelines for stablecoins