Berachain: Pioneering the First Proof-of-Liquidity Blockchain for DeFi and EVM Compatibility
Berachain is a layer 1 blockchain compatible with the Ethereum (EVM) ecosystem that relies on a new consensus mechanism called “Proof-of-Liquidity” (PoL). This protocol rethinks how rewards are distributed on a blockchain, favoring users who provide liquidity rather than those who simply stake their tokens.
Berachain Key Features and Advantages
Ecosystem Key Aspects
DEX
BEX (Berachain Exchange) is a decentralized exchange that allows token exchanges on Berachain.
BGB Station: Governance Center
BGB Station is Berachain’s central governance platform, allowing BGT (Berachain Governance Token) holders to actively participate in protocol decisions.
Bend: Berachain’s lending platform
Bend is a decentralized lending and borrowing platform on Berachain.
Innovative blockchain
Our own blockchain has proof of liquidity — this is an entirely new approach.
Security
EVM compatibility and three tokens ensure network security.
Wide opportunities
The platform provides projects with vast launch opportunities — from DEXs to applications, games, and other DeFi developments.
Berachain’s idea is to solve two critical problems in DeFi: the lack of liquidity and the centralization of validators (often observed in conventional proof-of-stake systems). Hence, the interest in this proof of liquidity encourages collaboration between all the network actors: those who validate transactions, decentralized applications, and funds.
How Does the Berachain Blockchain Work?
Berachain is based on the BeaconKit, a modular consensus engine that uses CometBFT software to validate transactions.
Now, the blockchain is built in two distinct layers:
- An execution layer identical to Ethereum’s (using EVM), meaning that existing applications on Ethereum can run directly on Berachain without changes.
- A consensus layer that introduces PoL (Proof-of-Liquidity).
Proof-of-Liquidity works differently from traditional mechanisms, such as Proof-of-Stake (PoS), where there is often a lack of incentive for different stakeholders. Instead of simply rewarding validators, PoL creates a market where validators can direct BGT emissions to different “reward vaults.” Users who provide liquidity to these vaults receive a share of the BGT emitted.
Validators play a dual role: they secure the network and direct rewards to liquidity pools, creating a balance between network security and utility.
Let’s examine each of these elements, which are essential to Berachain’s proper functioning.
Berachain and its compatibility with EVM:
Berachain’s execution layer works identically to Ethereum’s. This means that this blockchain relies on already established execution clients, such as Geth, Reth, Erigon, and Nethermind, to manage the execution of smart contracts.
This approach brings several benefits:
- Developers can reuse familiar tools, like Solidity, without learning new languages or frameworks.
- The integration of the latest Ethereum updates is done automatically and immediately
- Full compatibility with Ethereum namespaces and RPC endpoints is ensured.
From a technical perspective, every improvement made to Ethereum execution clients directly benefits Berachain. For example, when the Dencun update was deployed to Ethereum, Berachain could integrate it instantly without any additional changes.
For development teams, this native compatibility with the EVM removes the need to rewrite their code or adapt their existing applications — because everything works directly on Berachain.
Additionally, all popular libraries and frameworks from the Ethereum ecosystem remain entirely usable on Berachain.
Proof-of-Liquidity: a genuinely different consensus mechanism?
Unlike Proof-of-Stake (PoS), where users are rewarded for simply locking up their tokens (staking), Berachain’s Proof-of-Liquidity (PoL) emphasizes “active participation” within the network, in addition to reducing centralization around a few large validators.
In other words, Proof-of-Liquidity allows users to actively provide liquidity to the network (because liquidity is provided to the entire Berachain ecosystem and not to a single validator) rather than simply tying up their tokens to secure the network.
To achieve this, Berachain has created a system where validators don’t directly earn BGT (Berachain Governance Token) rewards. Instead, they earn the right to direct these emissions to specific reward vaults. This creates an environment where applications compete for these emissions as they seek to attract validators to their vaults for a greater share of liquidity and rewards (and, therefore, security). Of course, validators still earn rewards based on the amount of BGT delegated to them.
Users can also lock their assets in these vaults to receive a share of the BGT issued in the form of yields.
For example, a user who provides LP tokens (representing a liquidity position) or stakes their tokens can claim these rewards.
And to attract validators to their vaults, protocols offer incentives in the form of exchange rates. A vault could, for example, offer 30 USDC for every BGT issued, while a DEX would offer 10 of its native tokens.
The benefits that this system could bring are pretty relevant:
- A fairer distribution of rewards between validators and network participants.
- Strengthening decentralization through better distribution of power.
- Collaboration between validators and protocols via the incentive system.
PoL is a system that focuses on active participation rather than simple passive token-holding.
What are the advantages of Berachain’s technical architecture?
As mentioned above, Berachain relies on BeaconKit, a “modular consensus engine” that allows the network to quickly adapt the protocol to market developments thanks to its block-based design. Here, developers can update specific parts without modifying the entire system, hence the term “modular.”
Additionally, Berachain integrates CometBFT, a protocol based on the “Byzantine Fault Tolerance (BFT)” principle. In short, this mechanism ensures the proper functioning of the network even if some nodes become faulty or malicious. To be more precise, the system maintains its integrity as long as less than a third of the nodes are compromised.
The platform also relies on Polaris EVM, a framework that provides great flexibility to developers. This technology:
- Allows seamless integration with other consensus engines like Cosmos-SDK
- Uses precompiles to perform complex calculations efficiently
- Reduces transaction costs through native optimization
The combination of these three technologies offers considerable advantages. On the one hand, BeaconKit and CometBFT ensure the security and speed of transactions. On the other hand, Polaris EVM gives developers the freedom to implement advanced features without compromising network performance.
BERA, BGT, and HONEY tokens: pillars of the Berachain ecosystem
Berachain’s architecture is based on a three-token system that works in sync to create a stable and dynamic ecosystem. (At the time of writing, Berachain is still in the testnet, and therefore, the tokens discussed below are not yet available on the market.)
BERA — the native token of the Berachain
BERA is the native token of the Berachain blockchain. It will mainly be used to settle gas fees when executing transactions and smart contracts. It is also used to provide liquidity within Berachain pools or to be staked to participate in the validation of blocks with network validators.
This token also represents the standard means of exchange for value transfers within the ecosystem.
BGT — Berachain’s governance token
On its side, the Berachain Governance Token (BGT) gives holders direct decision-making power over the protocol’s evolution. To put it simply, BGT holders can use their tokens to vote on different community proposals directly on Berachain’s “BGT Station” platform.
For example, holders will be able to make decisions regarding collectively:
- Voting on protocol broadcasts;
- The whitelist of assets.
But that’s not all: its particularity lies in its non-transferable character, although it can be converted into BERA at a ratio of 1:1 via a burn mechanism.
Users obtain BGT in several ways:
- By providing liquidity on the Berachain Exchange (BEX)
- Borrowing HONEY on the Bend platform
- By depositing HONEY into the bHONEY vault
HONEY — Berachain’s stablecoin
To complete this structure, the stablecoin HONEY brings the necessary stability to the ecosystem. Indexed to the US dollar with a 1:1 ratio (1 HONEY = 1 USD) and fully collateralized, it is a stablecoin that can be used for daily transactions and users’ trading strategies.
Of course, you can use it to provide liquidity in Berachain pools or even stake it (probably) to obtain rewards.
What are the products of the Berachain ecosystem?
As a blockchain, Berachain will welcome many products and protocols within its ecosystem. And that is the case today, even though the protocol is still in testnet.
BEX: Berachain’s native DEX
BEX (Berachain Exchange) is a decentralized exchange that allows token exchanges on Berachain.
Here are all the services offered by BEX:
Decentralized Token Exchange: Users can trade supported assets directly on the platform via an AMM (Automated Market Maker ) mechanism, similar to Uniswap or Balancer.
Liquidity provision: Users can deposit their tokens into liquidity pools to facilitate trading and receive rewards.
Permissionless pool creation: Any user can create a new liquidity pool. Each pool can contain up to 8 tokens, with custom weights for each asset.
BGB Station: Berachain’s Governance Center
BGB Station is the central governance platform of Berachain, allowing BGT (Berachain Governance Token) holders to participate actively in decisions regarding the protocol. Here are its main features:
Staking: Users can allocate their funds to validators and receive rewards.
Vault: An overview of all operational vaults on the Berachain network
Reward Tracking: Users can track rewards related to their participation in governance.
Bend: Berachain’s lending platform
Bend is a decentralized lending and borrowing platform on Berachain.
Its main features include:
Cryptoasset Lending and Borrowing: Users can lend to earn yields and borrow HONEY using their cryptocurrencies as collateral (WBTC and WETH at the moment).
Dynamic interest rates: Rates are adjusted automatically based on supply and demand.
Automated liquidations: to maintain protocol stability in case of undercollateralization of loans.
Berachain Fundraisers
The project has raised $142 million over two funding rounds. Polychain Capital, Hack VC, and Tribe Capital are among those involved in these fundraising rounds.
Following these fundraisings, Berachain reached an estimated valuation of $1.5 billion, moving closer to the coveted “unicorn” status in the blockchain industry.
In February 2025, the Berachain crypto project launched its own blockchain network. After the network launch, Binance, Bybit, Kucoin, and MEXC announced they would add the BERA token to their trading lists.
The BERA token’s listing on significant exchanges may increase liquidity and attention to the startup. Users can trade the token on leading platforms, opening new opportunities for investors and ecosystem participants.