TL;DR
- Innovative PoL Launch: Berachain introduces its Proof-of-Liquidity system, kickstarting Phase 1 of on-chain governance with decentralized BGT distribution.
- Dual Advantage: Unlike traditional PoS, users stake assets in DeFi liquidity pools to secure the network while keeping funds actively usable.
- Robust Token Ecosystem: The system leverages a balanced approach with BGT for governance and BERA for transaction fees, reinforcing Berachain’s leadership in blockchain innovation.
Berachain, an EVM-based Layer 1 blockchain, is set to redefine blockchain governance by launching its innovative Proof-of-Liquidity (PoL) system today. This marks the beginning of Phase 1 of Berachain’s on-chain governance, introducing a decentralized approach to distributing its governance token, BGT. The rollout starts with select DeFi liquidity pools, with plans to expand to additional reward vaults in the future.
How Proof-of-Liquidity Works
Unlike traditional Proof-of-Stake (PoS) systems, Berachain’s PoL mechanism integrates liquidity provision into network security and governance. Users are encouraged to stake assets in DeFi liquidity pools rather than locking them in isolated environments.
By doing so, they earn BGT, a soulbound governance token that cannot be transferred but plays a pivotal role in directing rewards and influencing network decisions.
Validators rely on BGT delegations to enhance their consensus influence, tying the network’s security directly to its liquidity ecosystem. This innovative approach ensures that staked assets remain usable while contributing to the blockchain’s overall functionality and governance.
Berachain’s Token Ecosystem
The blockchain operates with multiple native tokens, including BERA, the gas token used for transaction fees and validator staking. BGT, on the other hand, is central to the PoL system, serving as the governance token earned through liquidity provision. This separation of roles between tokens ensures a balanced and efficient ecosystem.
A Milestone in Blockchain Development
Berachain’s journey to this milestone has been marked by significant achievements. The platform initially launched with Boyco, a pre-mainnet liquidity platform, amassing $3 billion in total value locked. Following its mainnet launch in February, these funds are now set to be allocated within the PoL system.
With substantial funding rounds in 2023 and 2024, Berachain has demonstrated its commitment to innovation and growth. The introduction of the PoL system is expected to further solidify its position as a leader in the blockchain space.
As Berachain continues to expand its PoL system, the blockchain community eagerly anticipates the impact of this groundbreaking approach on governance and liquidity. By aligning network incentives with ecosystem security, Berachain is paving the way for a new era in decentralized finance.
