MrTigre

Key Takeaways

Berachain is a Layer 1 blockchain built around Proof of Liquidity (PoL), a consensus mechanism that ties network security to liquidity provision.

PoL allows users to stake and provide liquidity at the same time, earning rewards through both activities rather than choosing one over the other.

The network runs on three tokens: BERA (gas), BGT (governance), and HONEY (stablecoin), each serving a distinct role in the ecosystem.

Berachain is EVM-identical, meaning it runs the same execution environment as Ethereum and supports the full suite of Ethereum-compatible tools.

Introduction

Berachain is a Ethereum-compatible Layer 1 blockchain that launched its mainnet on February 6, 2025. It takes a different approach to consensus: instead of relying on a standard proof-of-stake model, Berachain uses Proof of Liquidity (PoL). This design makes liquidity provision a core part of how the network operates, rather than a separate activity.

Traditional blockchains separate staking from decentralized finance (DeFi). Stakers lock up assets to secure the network; liquidity providers deposit assets into protocols to enable trading or lending. Berachain attempts to merge these two functions. Users can stake assets, earn rewards, and contribute to the network's security, all through the same mechanism.

How Berachain Works

Proof of Liquidity (PoL)

Proof of Liquidity is Berachain's consensus mechanism. It connects network validation directly to liquidity provision. When users deposit assets into approved reward vaults, they earn BGT, the network's non-transferable governance token.

BGT can be delegated to validators, giving them voting power. Validators with more BGT delegation have more influence over which liquidity pools receive BGT emissions. This creates a cycle: validators are incentivized to attract delegators, and users are incentivized to provide liquidity in pools that validators support.

Users can also burn BGT to receive BERA, the network's gas token. This makes BGT valuable even though it can't be transferred directly. The process is one-way: BERA cannot be converted back into BGT.

EVM-identical execution

Berachain's execution layer is EVM-identical, which is a stronger claim than EVM-compatible. EVM-compatible chains often diverge from Ethereum's specifications in various ways. EVM-identical means Berachain runs the same execution environment, supporting the same smart contracts, tools, and developer workflows without modification.

Because Berachain uses Ethereum's execution clients, such as Nethermind, Erigon, and Geth, any updates to Ethereum's execution layer can be applied to Berachain directly. Developers familiar with Ethereum can deploy applications on Berachain without rewriting their code.

BeaconKit framework

Berachain uses a custom consensus framework called BeaconKit. This framework integrates CometBFT, a Byzantine fault-tolerant consensus system that keeps the network running even if some validators go offline. CometBFT is the same consensus engine used by the Cosmos ecosystem.

BeaconKit connects to Ethereum's execution layer through the Engine API, which is the same interface Ethereum uses internally for its consensus-execution split introduced after The Merge. This modular design allows Berachain to add components like rollups or custom block builders without changing the core protocol.

Berachain Tokenomics

Berachain uses three tokens, each with a distinct function:

BERA: The native gas token used to pay transaction fees. Validators can stake BERA to participate in consensus.

BGT: A non-transferable governance token earned by depositing assets into reward vaults. BGT can be delegated to validators or burned in exchange for BERA. It cannot be bought or sold on secondary markets.

HONEY: Berachain's native stablecoin pegged to the US dollar. HONEY can be minted by depositing approved collateral into a vault through the HoneySwap DApp. Minting rates are set by BGT governance.

This three-token model is central to Berachain's design. BERA handles day-to-day transactions, BGT ties governance power to liquidity activity, and HONEY provides a stable medium of exchange within the ecosystem.

Berachain's Native DApps

While Berachain supports any EVM-compatible application, it also ships with several native DApps built around its PoL mechanism:

BEX

BEX is Berachain's native decentralized exchange (DEX). Users can swap tokens and provide liquidity to liquidity pools. Certain liquidity pools are eligible for BGT rewards, decided by validator governance. To use BEX, you need a compatible wallet and enough BERA to cover transaction fees.

BEND

BEND is a lending and borrowing platform that uses HONEY as the primary borrowing asset. Users can lend stablecoins and earn fees, or borrow by depositing supported crypto assets as collateral. Lenders and liquidity providers can also earn BGT rewards through the platform.

To borrow on BEND, you need to provide collateral assets. The platform tracks account health based on the value of your collateral relative to your outstanding debt.

BERPS

BERPS is a leveraged futures trading platform. It uses HONEY as collateral and allows positions of up to 100x leverage on supported trading pairs. Liquidity providers who deposit into BERPS can earn BGT rewards. Standard BERA is required to cover transaction costs before opening a position.

BERA on Binance

Binance listed BERA in February 2025 following a HODLer Airdrops distribution through the HODLer Airdrops program. This program rewards BNB holders based on historical snapshots of their Simple Earn balances during designated eligibility periods.

Ten million BERA tokens, representing 2% of the genesis total supply, were allocated for distribution to eligible BNB holders. Following the airdrop, BERA was listed on Binance with a Seed Tag applied.

FAQ

What is Proof of Liquidity?

Proof of Liquidity (PoL) is Berachain's consensus mechanism. Instead of validators simply locking up tokens to earn the right to validate blocks, PoL requires that liquidity be actively provided to the ecosystem. Users deposit assets into reward vaults and receive BGT in return, which can then be delegated to validators to influence governance and emissions.

What is BGT and how do you get it?

BGT stands for Berachain Governance Token. It is non-transferable, meaning it cannot be bought, sold, or sent to another wallet. The only way to earn BGT is by depositing approved assets into reward vaults on Berachain. Once you have BGT, you can delegate it to a validator to participate in governance, or burn it to receive BERA.

Is Berachain compatible with Ethereum wallets and tools?

Yes. Because Berachain is EVM-identical, it works with all standard Ethereum wallets, tools, and developer frameworks. You can use MetaMask and other popular wallets, and developers can deploy Solidity smart contracts without modification.

What is HONEY used for?

HONEY is Berachain's native stablecoin, pegged to the US dollar. It is used as collateral for trading on BERPS, as the primary borrowing asset on BEND, and as a general medium of exchange within the Berachain ecosystem. HONEY can be minted by depositing approved collateral through the HoneySwap DApp.

Closing Thoughts

Berachain introduces an approach to blockchain consensus that ties network security directly to liquidity. Its Proof of Liquidity mechanism attempts to align the interests of validators, liquidity providers, and governance participants through a single system. The three-token model, BERA for gas, BGT for governance, and HONEY for stability, reflects this design philosophy.

Whether PoL proves durable as a consensus model will depend on how well it sustains liquidity across different market conditions. Berachain's EVM-identical architecture gives it access to the full Ethereum toolset, lowering barriers for developers and existing DeFi users looking to explore the ecosystem.

Further Reading

What Is Ethereum?

What Are Smart Contracts?

What Are Stablecoins?

Blockchain Layer 1 vs Layer 2 Scaling Solutions

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