Berachain upgrades to PoL Consensus Mechanism, launching V2 version

Berachain, as a distinctive 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, 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-driven underlying structure.

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

PoL Consensus Mechanism Overview

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

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

• BGT: As the native governance token and the leading asset for incentive distribution
• BERA: Staking assets for validators, also承担链上 Gas 费用功能.

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

In this mechanism, protocols or DApps that wish to receive BGT incentives need to apply to join the PoL reward fund whitelist pool and provide attractive bribes to attract validators' BGT allocations. Validators will receive BGT token rewards when they successfully produce blocks, including a base block reward and a "variable reward."

Validators will allocate most of the variable rewards to the governance-approved whitelist PoL pools according to their own strategies through the BeraChef contract. For validators, they generally tend to allocate more BGT rewards to PoL pools that can provide higher protocol incentives.

The PoL pool of the protocol allocates BGT rewards to LP users after receiving them. Therefore, by becoming an LP in some PoL pools on Berachain, in addition to receiving regular farming rewards, users will also natively obtain BGT token incentives from the underlying protocol, with APY typically being quite high.

BGT stakers can delegate their BGT tokens to validators, helping validators increase their "Boost" value. Validators will periodically distribute the protocol rewards they earn proportionally to the BGT delegators who support them.

Improvements of PoL V2 Version

In Berachain v1, the BGT token is deeply integrated into the economic circulation system. However, the economic role of BERA in the v1 phase is relatively weak, making it difficult for users to obtain on-chain rewards from BERA through native means.

The v2 version introduces the BERA incentive module, allowing BERA to better integrate into the Berachain economic ecosystem and empower the ecosystem.

BERA Incentive Module

In v2, users can stake BERA tokens directly with single-coin staking through Berahub to earn native rewards from the chain ecosystem. The system will convert the staked BERA into WBERA and provide a receipt token sWBERA.

sWBERA is similar to LST and can be used as a collateral asset to capture yields again in the DeFi protocols of the Berachain ecosystem, enhancing capital efficiency.

The earnings of BERA stakers come from 33% of the bribery income obtained by validators. This portion of income will be repurchased as WBERA and then distributed to BERA stakers. Currently, the unilateral staking yield of BERA can reach 103%, making it the highest single-coin staking yield among Layer 1s.

BERA Staking Yield Authenticity

The native staking of BERA does not rely on inflation to "print coin distribution"; its mechanism is supported by real yield. In Berachain's PoL model, the protocol will initiate "bribery" towards validators in order to compete for BGT rewards. Most of these bribery funds come from the protocol's own treasury and are paid in the form of stablecoins, mainstream assets, or protocol tokens.

The system charges a 33% fee, which is uniformly auctioned as WBERA by the network, and finally distributed proportionally to users who stake BERA. This process is similar to the network selling the "token issuance rights" and then distributing the proceeds to the stakers.

Institutional Friendliness

The Berachain PoL v2 model monetizes inflation into real protocol income, creating a clear and well-sourced on-chain real yield model for BERA. The yields generated by this model can be directly packaged, split, and distributed uniformly in a custodial environment, allowing BERA staking to have the potential to be packaged by institutions as wealth management products, custodial agreements, and structured income tools.

This design aligns with the direction advocated by the recently highly discussed "Clarity Act", binding revenue to real economic activities through the mechanism layer, providing a clear source of income and a transparent audit structure for on-chain financial instruments.

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

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