What Is Berachain? The Proof-of-Liquidity Blockchain and its Ecosystem

1. What is Berachain?

Berachain is a Layer-1 blockchain that uses a unique Proof-of-Liquidity consensus mechanism, offering an alternative to Ethereum’s Proof-of-Stake (PoS). While the network is EVM-identical, ensuring compatibility with Ethereum-based applications, it also integrates a distinct multi-token system and a governance model to promote ecosystem growth and liquidity.

The blockchain launched its first testnet in January 2024, initially based on the Cosmos SDK. However, due to the network's high transaction volume, it quickly transitioned to its own modular consensus layer, BeaconKit, allowing for greater efficiency and scalability.

2. Proof-of-Liquidity

Unlike Bitcoin’s energy-intensive Proof-of-Work (PoW) model or Ethereum’s Proof-of-Stake system, Berachain operates on Proof-of-Liquidity. This innovative model aligns the incentives of validators, developers, and users by incentivizing liquidity provision as a core function of the network.

In the Proof-of-Liquidity system, users stake BERA tokens to secure the network and participate in governance, while validators propose blocks and earn rewards in BGT (the governance and rewards token). The liquidity provided by users is essential to the blockchain’s security and its ability to handle transactions efficiently.

3. Berachain’s Native Tokens and use cases on Berachain

Berachain operates with a unique multi-token model, consisting of three native tokens: BERA, BGT, and HONEY. Each of these tokens serves a different function within the ecosystem.

BERA: BERA is the native gas token for Berachain, similar to Ethereum’s ETH. Users need BERA to pay for transaction fees on the network, and it is also required for staking in the Proof-of-Liquidity mechanism. BERA tokens are available for trading on major exchanges like Binance, Coinbase, and OKX.
BGT: BGT is the governance and rewards token of the network. Unlike BERA, BGT is non-transferable and can only be earned by participating in productive activities such as providing liquidity on Berachain’s decentralized exchange (BEX). BGT tokens are used for governance proposals, and they can be delegated to validators. While non-transferable, BGT can be burned for BERA in a 1:1 ratio.
HONEY: HONEY is Berachain’s native stablecoin, designed to be soft-pegged to the U.S. dollar. HONEY can be minted by depositing collateral into approved vaults, and it is used for various purposes within Berachain’s DeFi ecosystem, such as in Bend, the non-custodial lending protocol.

4. The Berachain Airdrop and Tokenomics

In February 2025, Berachain launched a token airdrop for its native token, BERA. A total of 500 million BERA tokens will be available, with a 10% annual inflation rate. Approximately 49% of the tokens are allocated to the community, including a 15.8% share (79 million BERA) that was airdropped to eligible participants starting February 6.

The airdrop eligibility was checked by users through Berachain’s official tool, and NFT holders from Berachain’s NFT collection were also able to bridge their tokens to the mainnet to claim their rewards.

5. Pre-Launch Liquidity Initiatives

Berachain is one of the few blockchain projects that has put significant effort into gathering liquidity before its mainnet launch. The project conducted two pre-launch liquidity initiatives using Boyco, a platform designed to help gather assets. This initiative helped attract over $3.3 billion in assets, securing a solid foundation for liquidity right from the start.

By focusing on liquidity from the outset, Berachain has managed to position itself as a blockchain with substantial depth and functionality, allowing applications to thrive from day one.

7. The Berachain Community and NFT Roots

Berachain’s roots can be traced back to the creation of a rebasing NFT collection called Bong Bears in 2021. These NFTs were the first step in building a loyal community, which later evolved into the foundation for the Berachain ecosystem. The NFT holders, often referred to as the Bera community, played a vital role in supporting and funding the project, raising over $100 million to develop the blockchain.

The Bong Bears NFTs were followed by several other themed collections, including Bond Bears and Boo Bears. The community remains deeply involved in the network’s growth and the launch of new applications and initiatives.

8. Roadmap and developments

The network will integrate new Ethereum upgrades into its system, ensuring that it remains compatible with Ethereum’s ecosystem. Additionally, Berachain plans to expand its DeFi offerings, allowing for the development of more dApps and financial products that utilize its liquidity-centric consensus mechanism.

Governance improvements will also be a focus, allowing BGT holders to have more influence on network decisions and the future direction of Berachain.

9. Conclusion

Berachain represents an exciting innovation in the blockchain space with its Proof-of-Liquidity consensus mechanism and EVM-identical architecture. The project not only offers a more efficient and scalable blockchain but also introduces a multi-token ecosystem designed to enhance liquidity and reward participation. With a strong community, a well-thought-out airdrop strategy, and significant liquidity initiatives, Berachain is poised to become a key player in the blockchain and DeFi landscapes. As the project evolves, its unique features and growing ecosystem promise to offer new opportunities for developers, users, and investors alike.

Readmore: