What is Berachain? Proof-of-Liquidity, Airdrop & More

What is Berachain?

Berachain is a Layer 1 blockchain that merges EVM-identical compatibility with a Proof-of-Liquidity (PoL) consensus model. This setup allows Berachain to quickly adopt Ethereum upgrades like Dencun, while leveraging unmodified EVM clients such as Geth and Nethermind. PoL aligns incentives across validators, protocols, and liquidity providers, enhancing both network security and liquidity efficiency.

Originally launched as the NFT project Bong Bears, Berachain evolved into a serious blockchain player. In April 2024, the project raised $42 million in a funding round, securing its position as one of the most well-funded blockchain projects of the year.

Berachain uses a tri-token system: $BERA for gas, $BGT for governance, and $HONEY as its stablecoin. Built on the BeaconKit framework with CometBFT consensus, it offers modularity and scalability, making it ideal for developers needing low cost and fast blockspace for their applications.

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What is Proof-of-Liquidity?

Proof-of-Liquidity (PoL) is a unique consensus mechanism that secures the network by encouraging liquidity contributions.

Unlike traditional Proof-of-Stake (PoS) systems, PoL asks validators to not only stake $BERA but also direct liquidity into the ecosystem. This setup aligns validators, protocols, and liquidity providers toward growing the network while keeping it secure.

Here’s an overview of how PoL works within Berachain:

• Staking and Liquidity: Validators need to stake $BERA to secure the chain and are rewarded for directing liquidity to reward vaults.
• Governance Tokens: Liquidity providers earn $BGT, a non-transferrable governance token, by providing liquidity and can delegate it to validators to boost their rewards.
• Collaborative Growth: This system makes sure validators and protocols work together, aligning incentives to drive both liquidity and network security.

The advantage of PoL over standard PoS is its ability to reward not just staking, but also liquidity provision, creating a more balanced and growth-driven network environment.

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Berachain Tokenomics

Berachain operates with a tri-token model, consisting of BERA, BGT, and HONEY. Each token plays a specific role in maintaining network functionality, governance, and liquidity.

• BERA (Gas Token): BERA is the native token of Berachain and is used to pay for gas (transaction fees) and to stake in order to become a validator. Validators must stake BERA to secure the network and produce blocks. BERA is tradable and can be earned by staking liquidity in whitelisted pools.
• BGT (Bera Governance Token): BGT is a non-transferable governance token that can only be earned by staking BERA or providing liquidity. It is crucial for governance decisions, such as voting on protocol emissions and whitelisting assets. BGT can also be burned 1:1 for BERA, though this conversion is one-way. The more BGT a validator attracts from delegations, the greater their share of rewards, which ties liquidity provision directly to governance.
• HONEY (Stablecoin): HONEY is a fully collateralized stablecoin pegged to the US dollar. It is minted by depositing eligible collateral (such as BTC or ETH) into vaults and plays a key role in providing liquidity for the Berachain ecosystem. It is also used in perpetual trading, lending, and other decentralized finance (DeFi) activities.

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What Makes Berachain Unique?

Berachain’s PoL mechanism stands out as a novel approach to blockchain consensus, intertwining liquidity provision with network security and governance. Here are some key aspects that make Berachain unique:

• Tri-token Model: By separating the governance token (BGT) from the gas token (BERA) and the stablecoin (HONEY), Berachain ensures that power users who pay high gas fees do not lose governance power over time. This model incentivizes active participation and creates a self-reinforcing system where liquidity, governance, and network security are interdependent.
• Bribes and Incentives: Validators can receive bribes (fees or tokens) from protocols to direct BGT emissions to specific liquidity pools. This creates a competitive environment where protocols compete to attract liquidity, similar to the Curve Wars seen in the DeFi space. Validators benefit by forming partnerships with protocols, while liquidity providers earn more through the validator's bribe-enhanced pools.
• Flywheel Effect: The combination of liquidity staking, governance, and rewards creates a flywheel effect, where more liquidity leads to higher rewards, attracting more users and protocols, which in turn increases liquidity. This effect keeps the network active and prevents it from becoming a "ghost chain."

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Berachain Airdrop

While Berachain hasn’t officially confirmed an airdrop, there is growing speculation that early participants in its testnet could receive rewards. To position yourself for a potential airdrop, here’s how you can get involved in the testnet:

1. Get BERA Test Tokens: Secure Berachain testnet tokens from the official faucet by submitting your wallet address (you need to have a minimum of 0.001 ETH in it).
2. Engage with BEX (Berachain DEX): Connect your wallet to BEX and swap a small amount of BERA for tokens like stgUSDC and BTC.
3. Provide Liquidity: Add liquidity to a BEX Pool by contributing BERA and other tokens to start farming BGT tokens.
4. Exchange for HONEY: Convert stgUSDC to HONEY in the Honey App.
5. Utilize Bend App: Deposit your BTC and borrow HONEY at the Bend App.
6. Trade on Berps: Open a long ETH position using HONEY on Berps.
7. Deposit in Vault: Place HONEY in the Berps Vault and receive bHONEY.
8. Claim BGT Tokens: After some time, claim your BGT tokens at Bend and BEX.
9. Delegate Your Tokens: Finally, delegate your tokens to Validators on BGT Station.
10. Get NFTs: Mint an NFT using the Binance Web3 Wallet.

Participating in these steps during the testnet could increase the chances of qualifying for an airdrop, as Berachain aims to reward early adopters​.

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Berachain Mainnet Launch

Berachain’s mainnet is expected to launch by the end of Q4 2024, as confirmed by Framework Ventures co-founder Michael Anderson during the Token2049 conference in Singapore. This follows the June 2024 release of the bArtio testnet V2, which introduced BeaconKit, a modular framework that separates the consensus and execution layers for improved scalability and EVM compatibility.

Key upgrades include requiring validators to run both a BeaconKit client and an EVM execution client (e.g., Geth), ensuring seamless Ethereum alignment. Additionally, $BERA is now staked to activate validators, and $BGT delegators are no longer at risk of slashing, setting the stage for the mainnet launch.

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Berachain Funding

Berachain has raised a total of 142 million across two funding rounds. The first round in 2023 brought in $42 million, led by Polychain Capital, valuing the project at 420 million. This initial funding allowed Berachain to accelerate the development of its Proof-of-Liquidity mechanism and expand its core team.

In 2024, the project secured an additional $100 million in a Series B round, co-led by Brevan Howard Digital in Abu Dhabi and Framework Ventures. The round also saw contributions from notable firms like Polychain Capital, Hack VC, and Tribe Capital through an SAFT (Simple Agreement for Future Tokens).

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Who is the Founder of Berachain?

Berachain was founded by a pseudonymous team, with key members being Smokey the Bera, Dev Bear, and Papa Bear. These founders initially started with the Bong Bears NFT collection, which laid the groundwork for the current Berachain ecosystem. Their background in DeFi and NFTs drove the development of Berachain’s Proof-of-Liquidity mechanism​.

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Bottom Line

To sum up, Berachain’s technical innovation lies in its modular design and Proof-of-Liquidity consensus, which aligns liquidity provisioning with network security. 

The tri-token system with $BERA for gas, $BGT for governance, and $HONEY as a stablecoin, creates a clear separation of roles that enhances decentralization and governance efficiency.

With significant funding, community hype and the mainnet launch expected by Q4 2024, Berachain is positioned to be the next big L1 to contend with Ethereum, Solana and other newcomers like Monad and MegaETH.