Berachain, a leading blockchain network, recently launched its highly anticipated Proof of Liquidity (PoL) system on March 24. This innovative incentive framework aims to redefine the distribution of block rewards within the ecosystem. Following the activation of PoL, Berachain’s native token, BERA, experienced a 16% price surge over the past 24 hours, trading at $7.89 at the time of writing.
The rollout of the PoL system introduced 37 reward vaults that are now live on the blockchain. These reward vaults are smart contracts designed to receive BGT emissions, which can be utilized by protocols to distribute rewards to users. According to an official announcement from Berachain, users will be able to claim vault incentives starting from March 25, with emissions gradually increasing to reach the full annual percentage yield (APY) over the next three days, marking a significant reduction from the previous seven-day timeline.
In a span of less than two months, Berachain has quickly risen to become the fifth-largest blockchain in terms of total value locked, reaching an impressive $5.3 billion in locked assets.
The PoL framework operates on a dual-token model, where validators stake BERA for chain security and rewards, while investors utilize BGT for governance and block reward allocation. Under the new system, validators receive BGT emissions based on their delegated BGT boost percentage, which can then be directed to the reward vaults of their choice. This mechanism adds flexibility to Berachain’s validator economics, incentivizing validators to maximize protocol-provided incentives efficiently.
As the network introduces new vaults, users engaging in activities such as staking, swapping, or yield farming can earn BGT by staking receipt tokens. Berachain’s validator set is limited to the top 69 validators by staked BERA, with specific entry requirements and caps in place to ensure fair participation. Validators receive fixed base rewards and variable BGT rewards based on their boost level when selected to propose a block.
The launch of the Proof of Liquidity system signifies a significant shift in Berachain’s economic design, aligning block reward issuance with application usage and user engagement through a dynamic incentive layer. Protocols within the ecosystem will now compete to attract liquidity by offering compelling vault incentives, with rewards refreshed every five hours based on updated validator allocations. Berachain has also introduced the BeraHub platform, providing participants with real-time visibility into reward flow and distribution.
Decentralized application teams are actively integrating metadata associated with the vaults, including token logos and pool names, to enhance the overall user experience. With the implementation of the PoL system, Berachain is poised to drive increased engagement and participation within its ecosystem, fostering a vibrant and competitive environment for users and protocols alike.