Berachain upgrades to PoL Consensus Mechanism, launches new V2 version

Berachain, as a distinctive Layer 1 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 by PoL liquidity mining come from the chain's native incentive mechanism, aimed at building a more capital-efficient and incentive-oriented underlying structure.

Berachain 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 more explicit rights to earnings and value support.

Overview of PoL Consensus Mechanism

The operational logic of PoL integrates the PoS Consensus Mechanism, liquidity mining, and Curve's veCRV liquidity game model, establishing 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, while also承担链上Gas费用功能

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

Protocols or DApps seeking to obtain BGT incentives must apply to join the PoL reward fund whitelist pool and provide incentives to attract validators. When validators successfully produce blocks, the system provides BGT token rewards, including base block rewards and "variable quantity rewards."

Validators allocate most of the variable rewards to the whitelisted PoL pool through the BeraChef contract. Validators also receive incentives from the treasury when distributing BGT rewards. Protocols that can provide higher yields for LPs usually bring better returns for validators, so validators tend to allocate more BGT rewards to high-incentive PoL pools.

The PoL pool of the protocol distributes BGT rewards to LP users. BGT stakers can delegate their tokens to validators to increase their "Boost" value, and validators will periodically distribute the protocol incentives they receive proportionally to BGT delegators.

Under this mechanism:

1. Long-term games are formed between protocols, continuously attracting liquidity through profits, to bring a better liquidity foundation to Berachain.

2. Validators are also in competition to attract more BGT holders to support them, obtaining better "Boost" values and potential earnings, thereby optimizing network liquidity.

3. Participants who provide more liquidity can gain more say and economic benefits, forming a growth flywheel of liquidity, security, and incentive distribution.

The main improvements of PoL V2

In Berachain v1, the BGT token, as an asset with both governance and incentive functions, has been deeply integrated into the economic circulation system. In contrast, the economic role of BERA during the v1 phase is relatively weak, making it difficult for users to obtain on-chain earnings from BERA in a native way.

The main improvement of v2 is the introduction of the BERA incentive module, which allows BERA to better integrate into the Berachain economic ecosystem and empower the ecosystem.

BERA Incentive Module

v2 introduces the BERA incentive module, allowing users to stake BERA tokens directly in a single-coin staking manner through Berahub, to earn native rewards from the blockchain ecosystem.

The BERA incentive module is similar to the staking method. Users stake BERA tokens, and the system converts them into WBERA, providing a receipt token sWBERA after staking. Users can also directly stake WBERA tokens and similarly receive sWBERA. sWBERA, as LST, can capture yields in the DeFi protocols of the Berachain ecosystem, enhancing capital utilization.

In v2, the mechanism for BGT holders to delegate to validators remains unchanged. BERA staking is directly staked into the Berachain contract, providing an experience similar to PoS single-coin staking. It is important to note that there is a 7-day unlocking period when redeeming sWBERA for BERA.

In terms of sources of income, in v2, validators receive 33% of their bribery income repurchased as WBERA, which is distributed to BERA stakers. The staking income users receive depends on their proportion of BERA staked.

v2 has significantly lowered the threshold for users to earn income from BERA, allowing for direct staking at the blockchain layer, which enhances security and reliability. Currently, the unilateral staking yield of BERA can reach 103%, making it the highest single-coin staking yield among Layer 1.

BERA staking rewards have a real source

BERA native staking does not rely on inflation "currency distribution", but is supported by real yield.

In the PoL model, the protocol initiates "bribery" towards validators to compete for BGT rewards, with these funds primarily coming from the protocol's own treasury. The system charges a 33% fee, and the auction is for WBERA, which is distributed proportionally to BERA stakers.

This process is similar to the network selling "token issuance rights" and distributing the realized income to the stakers. Compared to other PoS networks, the inflation behind Berachain is supported by real funds, achieving a higher on-chain value return.

Therefore, the BERA staking yield belongs to "protocol layer real yield", which has stronger sustainability and long-term value support.

Institutional Friendliness

The PoL v2 model monetizes inflation into real income for the protocol, creating a clearly structured and clearly sourced on-chain real yield model for BERA. The yields produced by this model can be directly wrapped, split, and distributed in a CEX custody environment, giving BERA staking the potential to be packaged by institutions as wealth management products, custody agreements, and structured yield tools.

This design aligns with the recent requirements of the "Clarity Act" by binding the earnings to real economic activities through the mechanism layer, allowing on-chain financial instruments to have clear income sources, auditable underlying structures, and custodial, interpretable asset attributes.

In the future, if BERA launches Digital Asset Treasury(, it will provide compliant, custodial, and blockchain-based revenue paths with continuous cash flow characteristics for institutions and even publicly listed companies.

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

![])https://img-cdn.gateio.im/webp-social/moments-6b63552abda5aa5a4c990eb2dae9a703.webp(