Berachain to Launch Proof-of-Liquidity System, Kicking Off Onchain Governance

The PoL mechanism is designed to decentralize the supply of BGT, Berachain’s governance token, and enable more robust onchain governance. This launch will initially roll out in select DeFi liquidity pools, with plans to expand into additional reward vaults beyond just decentralized exchange (DEX) pools.

A New Approach to Token Staking and Governance

Berachain operates with multiple native tokens, including BERA, which is used for transaction fees and validator staking, and BGT, which is distributed as part of the PoL system. BGT is a non-transferable, soulbound token that can be earned by providing liquidity for governance and directing rewards. Unlike traditional proof-of-stake (PoS) blockchains where tokens are locked in a vacuum, Berachain’s system encourages users to stake assets in DeFi liquidity pools to earn BGT. Validators depend on the BGT delegated to them to strengthen their influence in the network’s consensus.

This system integrates liquidity provision directly into the network’s security, ensuring that the blockchain’s integrity is supported by the liquidity of its users. The liquidity providers’ staked BGT is not only used to validate transactions but also to guide the network’s governance.

The Concept of Proof of Liquidity

While Berachain operates with a PoS consensus mechanism, the PoL system offers a new approach by reimagining the role of staked assets in governance and security. The system allows validators to earn BGT emissions based on the amount of BGT liquidity providers delegate to them. The more BGT they control, the more influence they gain in shaping the network’s future and optimizing their rewards.

Berachain’s Growth and Success

Before its mainnet launch in February, Berachain used Boyco, its pre-launch liquidity platform, to build liquidity for decentralized applications (dApps) within the Berachain ecosystem. The launch proved successful, and by the time Boyco concluded, Berachain had attracted $3 billion in total value locked (TVL). In 2023, Berachain raised $42 million in a Series A funding round, boosting its valuation to $420.69 million. The platform followed this up with an additional $100 million raised in 2024, co-led by Polychain Capital and Framework Ventures.

With this strong financial backing and its innovative approach to governance and liquidity, Berachain is positioning itself as a unique player in the rapidly evolving blockchain space.