Berachain Rolls Out ‘Proof of Liquidity’ System

Berachain, an Ethereum Virtual Machine (EVM) Layer 1 blockchain, has launched its proof of liquidity (PoL) system, a model that kickstarts the network’s onchain governance and aims to decentralize the supply of its governance cryptocurrency, BGT.

Ahead of the launch, Berachain’s utility token, BERA, is up by around 30% in the past two days, according to Coingecko data.

Berachain’s Proof of Liquidity (PoL) is an alternative take on the popular Proof of Stake (PoS) consensus mechanism.

Rather than having users stake their tokens with validators on the network to achieve security as in PoS blockchains, Berachain’s PoL system encourages users to stake their tokens in decentralized finance (DeFi) liquidity pools in exchange for BGT, the network’s governance token. The staked assets are then delegated to validators on the network, boosting their influence and voting power.

Following the launch, 37 new reward vaults on Berachain have gone live. These are whitelisted smart contracts that can receive token emissions and allow decentralized applications (dApps) to distribute incentives to users. Berachain users can stake their assets in these liquidity pools to earn BGT and have a say in the network’s governance. BGT can be redeemed for BERA at a 1:1 ratio, but this action is irreversible.

The first batch of reward vaults is focused on decentralized exchange (DEX) liquidity pools.

“This is just the beginning. Starting next week, additional RFRVs will be reviewed for whitelist, expanding beyond DEX pools into new use cases with future batches—including RWAs, DeFi, gaming, and more,” Berachain said in a blog post.