The innovative Proof-of-Liquidity (PoL) mechanism from Berachain will officially launch on March 24, broadening the distribution of rewards beyond just BEX pools to include various apps and vaults.
On March 21, a post on X revealed that the PoL will become active on March 24, with additional vaults being integrated into the rewards pool.
Initially, Berachain’s (BERA) PoL was exclusively implemented within BEX pools to distribute BGT, facilitating decentralized on-chain governance.
Beginning Monday, this will extend beyond BEX to incorporate more applications and vaults, allowing them to earn rewards as well. The first set of Requests for Reward Vaults from apps has already been approved. Currently, rewards will be confined to DEX pools, but new vaults and use cases will begin receiving approvals next week. For holders of Berachain’s governance token, BGT, this expansion means they will now have a say in directing where rewards are allocated.
Understanding Berachain’s Proof-of-Liquidity mechanism
Berachain’s blockchain is designed to address incentive misalignments found in Proof-of-Stake (PoS) systems. On most PoS blockchains, users must lock their tokens to maintain security and earn staking rewards. While this locking is beneficial for safeguarding the network, it adversely affects the blockchain’s economy, leading to diminished crypto usage in applications and transactions. Consequently, users often prefer merely staking their assets to earn rewards instead of engaging with DeFi applications built on the blockchain.
Berachain aims to resolve the conflict between security and DeFi interaction with its distinctive PoL consensus mechanism. In a typical PoS environment, validators receive rewards for transaction validation and share a portion of these rewards with their delegators based on their stakes. In contrast, Berachain mandates that validators allocate most of their rewards—which are earned in BGT—to the app’s reward vault rather than retaining them entirely. This structure encourages applications to incentivize validators—typically through their native tokens—to boost their BGT allocation. The result is a competitive landscape where validators are motivated to support the most effective applications.
Meanwhile, the BERA token is currently trading at $6.35, which represents a 57% decline from its all-time high of $14.99 reached on February 6 at launch. After a significant drop from its initial post-launch peak to around $4 within just a few days, the price stabilized within a range of approximately $4 – $5 until a bullish surge to $9 occurred between February 18 – 21, driven by increased trading volume. This upward momentum extended into early March, with a peak at $9.2 before encountering resistance and subsequently retracing. Since then, the price has progressively declined, stabilizing around the $6 support level, and the trading volume has decreased, indicating that traders are likely awaiting the next significant catalyst.