Berachain launched its highly anticipated Proof of Liquidity (PoL) system on March 24, introducing a new incentive framework aimed at transforming the distribution of block rewards.
As of the latest update, the network’s native token, BERA, saw a 16% increase over the last 24 hours, trading at $7.89.
This rollout has brought 37 reward vaults online, which are now operational on the blockchain. These vaults function as smart contracts that can receive BGT emissions, enabling protocols to allocate rewards to their users.
According to an announcement from the team, vault incentives will be available for claiming starting March 25, with emissions expected to reach their full annual percentage yield (APY) within the next three days, shortening the prior timeline of seven days.
In under two months, Berachain has ascended to become the fifth-largest blockchain by total value locked, achieving a remarkable $5.3 billion.
PoL system and incentives
The PoL mechanism functions on a dual-token model: validators stake BERA to ensure chain security and earn rewards, while investors utilize BGT for governance and block reward allocation.
With the new framework, validators earn BGT emissions based on the percentage of delegated BGT boosts they hold. These emissions can then be directed to the reward vaults chosen by the validators, allowing protocols to leverage these emissions as user incentives.
This additional distribution layer enhances the flexibility of Berachain’s validator economics. The blockchain motivates validators to allocate emissions in a way that maximizes the protocol-provided incentives they obtain effectively.
As new vaults are activated, users providing liquidity across various protocols—whether through staking, swapping, or yield farming—can earn BGT by staking receipt tokens.
The validator set on Berachain is restricted to the top 69 validators ranked by staked BERA, requiring a minimum stake of 250,000 BERA and capping at 10 million BERA. The likelihood of proposing a block correlates directly to the individual validator’s stake.
When selected, validators earn a fixed base reward, along with a variable BGT reward that adjusts based on their boost level.
Competing for liquidity
The introduction of Proof of Liquidity signifies a significant shift in Berachain’s economic design, aligning block reward distribution with application utilization and user engagement through a dynamic, real-time incentive layer.
Consequently, protocols operating within the Berachain ecosystem will now be competing to draw in liquidity by offering attractive vault incentives.
These protocols essentially bid for emissions directed by validators, with updates occurring every five hours based on current validator allocations.
Additionally, Berachain has developed the BeraHub, which enhances transparency regarding rewards flow and distribution by providing real-time tracking of emissions and vaults.
Decentralized application teams are incorporating all relevant metadata related to the vaults, including token logos and pool names, into the broader deployment framework.
