Berachain and Proof-of-Liquidity

Berachain launched mainnet in February 2025. Its consensus is not standard proof-of-stake: it is Proof-of-Liquidity (PoL). Validators are chosen based on how much liquidity is bonded to their designated LP pools inside the chain's own DeFi.

Three-token model

• BERA. Gas token. Also staked to run validators.
• BGT. Governance token. Non-transferable, earned by providing liquidity to whitelisted pools.
• HONEY. Native overcollateralized stablecoin.

How PoL works

1. Users LP into whitelisted pools (BEX for DEX, BEND for lending, BERPS for perps).
2. They earn BGT proportional to their LP position.
3. BGT holders delegate to validators.
4. Validators earn block rewards (BERA + fees) proportional to delegated BGT.
5. Validators route rewards to LPs to attract more BGT delegation.

This means: the more LPs a validator's pools have, the more block rewards. Validators compete by paying LPs, not by sinking their own capital.

What this optimizes for

Bootstrapping DeFi liquidity. Traditional PoS pays validators to secure the chain and does nothing else. PoL pays validators only if they attract liquidity into productive DeFi pools. Every incremental token issued serves both consensus and TVL simultaneously.

Native protocols

• BEX. The DEX. Whitelisted pools earn BGT.
• BEND. Money market.
• BERPS. Perpetual futures.
• Third parties can integrate to earn BGT distribution.

Risks and open questions

• Novel mechanism; slashing conditions less battle-tested than Cosmos SDK.
• Validator concentration if a few pool operators dominate BGT distribution.
• Sustainability of yield vs. actual demand for the native protocols.