Berachain launches a new version of PoL V2, adding more value to the BERA Token

Berachain, as a distinctive Layer 1 blockchain project, has its greatest innovation in adopting the PoL (Proof of Liquidity) block reward distribution mechanism. This mechanism transforms the chain's block rewards into ecological growth momentum by directly allocating most of the rewards to users and liquidity providers within the ecosystem, thereby promoting application growth and on-chain liquidity accumulation.

In this model, all ecological assets participating in staking will provide on-chain liquidity support for Berachain. The rewards generated from PoL liquidity mining come from the chain's native incentive mechanism, aiming to build a more capital-efficient and incentive-oriented underlying structure.

Berachain has recently upgraded its PoL consensus mechanism and officially released the new V2 version. This upgrade mainly introduces a new token economic model, further endowing the BERA token with clearer rights to returns and value support.

Overview of PoL Consensus Mechanism

The operational logic of PoL integrates the PoS consensus mechanism, liquidity mining, and the veCRV liquidity game model introduced by Curve, establishing a new paradigm for on-chain governance and incentive distribution.

Berachain has designed two types of core on-chain native assets:

• BGT: The native governance Token and the leading asset for incentive distribution.
• BERA: Staking asset for validators, also承担 on-chain Gas fees functionality.

The main participant roles in the PoL model include: on-chain protocols on Berachain, validators in the network, and liquidity providers (LP).

In this mechanism, protocols or DApps wishing to obtain BGT incentives need to apply to join the PoL reward fund whitelist pool and offer attractive bribes to attract validators' BGT allocations. Validators are the block-producing roles in the network and must stake BERA tokens (. Upon successfully producing a block, they will receive BGT token rewards, including the base block production reward and "variable quantity rewards."

Validators will allocate most of the variable rewards according to their strategy through the BeraChef contract to the governance-approved whitelist PoL pools. Validators will also receive incentives at the rate set by the treasury when distributing BGT rewards, such as HONEY, USDC, etc.

Protocols that typically provide higher returns for LPs can offer better returns for validators, who tend to allocate more BGT rewards to these PoL pools. After receiving BGT rewards, the PoL pools of the protocol will distribute them to LP users. Therefore, by becoming an LP in some projects' PoL pools on Berachain, in addition to regular farming rewards, users will also receive native incentives in the form of the protocol's underlying BGT Token, with APYs usually being quite high.

BGT stakers can delegate their BGT Token to validators to help increase their "Boost" value, and the validators will periodically distribute the protocol rewards proportionally to the BGT delegators who support them.

Therefore, under the PoL model:

1. Agreements will form a long-term game to achieve better circulation, continuously attracting liquidity through yields. This "yield arms race" provides Berachain with a better liquidity foundation.

2. Validators are also engaging in games, hoping to attract more BGT holders to support them in order to obtain better "Boost" values and potential returns, thereby continuously helping the network optimize liquidity.

3. Whoever can provide more liquidity will have more say and economic benefits, creating a growth flywheel that integrates liquidity, security, and incentive distribution.

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Changes Brought by POL v2

In Berachain v1, the BGT Token, serving as an asset with both governance and incentive functions, has been deeply integrated into Berachain's economic cycle system. As an incentive asset with inflationary properties, BGT has clear native use cases at the blockchain layer and possesses sustainable yield capabilities.

In contrast, the economic role of BERA in phase v1 is relatively weak. Apart from bearing Gas fees and serving as a staked asset for validators, users can hardly obtain on-chain returns from BERA in a native way. Most BERA holders can only rely on third-party DeFi protocols, such as participating in LP farming of PoL pools that support BERA or its wrapped assets to indirectly obtain returns, but such paths often have high thresholds, cumbersome operations, and poor experiences.

Similarly, in the current globally increasingly stringent compliance environment, BERA faces similar issues as other native PoS assets on the chain, namely the lack of compliance-friendly yield models, making it difficult for institutional users to adopt or incorporate it into the traditional financial system, thus limiting market expansion opportunities.

The most intuitive improvement of v2 to Berachain is the introduction of the BERA incentive module, which allows BERA to be better integrated into the Berachain economic ecosystem and empowers the ecosystem without significantly altering the existing economic ecological system.

) BERA Incentive Module

The BERA incentive module introduced in v2 allows users to stake BERA tokens directly in a single-coin staking manner through Berahub, earning native rewards from the chain ecosystem.

The BERA incentive module is similar to a staking method. When users natively stake BERA tokens, the system converts them into wrapped tokens WBERA. After staking in the network, it issues a certificate token sWBERA. Users can also directly stake WBERA tokens and will similarly receive the sWBERA certificate token.

sWBERA Token is similar to LST and can be used as a proof of asset to capture returns again in the DeFi protocols of the Berachain ecosystem, enhancing capital utilization to achieve multiple benefits.

In v1, BGT holders delegate their BGT to validator roles to help increase the "Boost" value. In v2, users stake BERA tokens directly into Berachain's contract, experiencing a single-coin staking similar to PoS. It should be noted that redeeming sWBERA for BERA requires a 7-day unlock period.

From the perspective of revenue sources, in v1, the earnings of BGT staking users come from the bribery income obtained after validators provide incentives for specific PoL pools. In v2, 33% of this bribery income will be repurchased as WBERA and then distributed to BERA stakers ### for reinvestment (. The staking income that users receive depends on their staked BERA tokens' share of the total.

In v2, the threshold for users to earn income from BERA has been significantly lowered. They can directly stake at the blockchain layer, which offers higher security and reliability, without the need to become an LP through third-party agreements or engage in delegated staking.

Currently, the unilateral staking yield of BERA can reach 103%), which is the highest single-coin staking yield on Layer1(, representing a very considerable yield status. Although centralized exchanges also have BERA's earning coin function, the overall yield is about 60% to 90%. However, staking directly on Berahub is more cost-effective.

) BERA staking rewards have a real source.

The native staking of BERA does not rely on inflation to "print coins for distribution"; its mechanism itself provides real yield support.

In the PoL model of Berachain, the protocol competes for BGT rewards by initiating "bribes" to validators. Most of these bribe funds come from the protocol's own treasury and are paid in the form of stablecoins, mainstream assets, or protocol Tokens. These funds are not given directly to the validators but are collected by the system with a 33% fee, which is then uniformly auctioned for WBERA by the network, and finally distributed proportionally to users staking BERA.

Although BERA rewards are indeed being issued on-chain, this is not the same kind of inflation that appears out of nowhere as seen in other PoS networks; instead, it is backed by real funds. This process is similar to the network selling the "token issuance rights" and then distributing the realized income to the stakers.

For example, if both ETH and BERA issue 100 million USD Tokens annually:

ETH directly gives the stakers 100M dollars; Berachain sells inflation through a bribery mechanism. If the efficiency is 80%, it will gain approximately 80 million dollars in real revenue.

The result is: with the same inflation, Berachain can achieve a $180M on-chain value return, while ETH can only achieve $100M.

Therefore, the staking yield of BERA belongs to the "real yield of the protocol layer", which is not only more sustainable but also gives long-term value support to its native staking scenario.

Institutional Friendliness

The Berachain PoL v2 model monetizes inflation into actual income for the protocol, establishing a clearly structured and transparently sourced on-chain real revenue model for BERA. It does not rely on third-party protocols or secondary market speculation; instead, it completely derives from the real bribery expenditures of the on-chain protocol and converts them into traceable incentive funds through auctions.

The returns generated by this model can be uniformly packaged, split, and distributed in a centralized exchange custody environment, allowing BERA's staking to have the potential to be packaged by institutions as wealth management products, custody agreements, and structured yield tools. This effectively addresses the pain point of being difficult to directly reach institutional users.

On the other hand, the recently much-discussed "Clarity Act" establishes a clearer compliance framework for crypto assets, and the launch of PoL v2 is quite timely. By binding returns to real economic activities at the mechanism level, on-chain financial instruments should have clear sources of income, underlying structures that can be audited, and asset attributes that are custodial and interpretable for holders, which is one of the directions advocated by the Clarity Act.

If BERA launches the Digital Asset Treasury### in the future, it will provide institutions and even publicly listed companies with a compliant, custodial, and on-chain income path with continuous cash flow characteristics.

Overall, the launch of v2 not only accelerates the flywheel within the ecosystem but also carries a deeper strategic significance for long-term ecological development.