When you buy through affiliate links in our content, we may earn a commission at no extra cost to you. Learn 
Berachain is one of the most hyped crypto blockchain projects, and is expected to launch its mainnet in 2024.
The blockchain’s unique properties have attracted over 200 decentralized applications (dApps) and over eight million unique wallets to its testnet already.
What is Berachain and why is it special? Let’s find out.
What is Berachain?
Berachain is a layer one (L1) blockchain that incentivizes users to provide liquidity to its ecosystem via a unique consensus mechanism known as proof-of-liquidity (PoL).
The L1 is EVM-compatible meaning that it can host the decentralized applications currently existing on Ethereum (ETH).
Berachain is built using the Cosmos software development kit (SDK) that allows the L1 to be built with blockchain modularity in mind. This design will give Berachain developers the option to tap into third-party blockchain infrastructure for execution, data availability, settlement and consensus.
“Modular architectures are increasingly favored for the stack upgradability, should future tech advancements make current options obsolete,” said Knower Bera of Berachain in a blog post.
Berachain launched its public testnet in January 2024.
Berachain’s Proof-of-liquidity Defined
Berachain’s unique PoL consensus mechanism is what sets it apart from existing L1s in the market.
If you are wondering how PoL on Berachain works, you have to understand that it follows a flywheel approach where validators, dApps and users work together to maximize user retention and liquidity on the network.
PoL incentivizes users to add liquidity (i.e. cryptocurrencies) to liquidity pools (known as vaults or gauge on Berachain) of their choice. In exchange, liquidity providers are rewarded Berachain’s goverance token called $BGT.
Typically, users provide liquidity to vaults offering the highest BGT rewards.
The BGT rewards are sourced from network validators who receive BGT tokens when they propose a new block, similarly to how proof-of-stake (PoS) consensus mechanism works.
Berachain validators redistributed their BGT tokens to the vault of their choice.
Therefore, dApps on Berachain provide incentives to validators by distributing dApp tokens in exchange for directing liquidity providers to their dApp vaults.
Furthermore, users (liquidity providers) may also delegate their BGT tokens to validators to earn dApp token incentives.
Validators on Berachain are always looking to maximize BGT delegated to them, as the validator rewards earned from proposing new blocks depends on the governance tokens delegated to them.
“In other ecosystems, the relationship between users, validators, and applications is fragmented at best. At its core, proof of liquidity makes it easier for applications to acquire users and liquidity and provides validators with differentiated revenue streams from collaborating with those protocols,” wrote Camila Ramos of Berachain in a blog post.
What Are the 3 Berachain Tokens?
The Berachain L1 ecosystem is powered by three tokens. They are:
- Bera Governance Token (BGT) – BGT is a non-transferable token that can only be acquired by providing PoL liquidity on Berachain. BGT is used to vote on ecosystem decisions and governance proposals. Token holders can delegate BGT to validators to earn dApp incentives. BGT is also used to burn BERA token.
- BERA – BERA is the native token of Berachain that is used to pay gas fees and for staking to activate validator node.
- HONEY – Honey is a fully collateralized stablecoin that is pegged to the US dollar.
Who Are the Berachain Team?
Berachain started as a non-fungible token (NFT) collection called Bong Bears in August 2021. In 2022, the development team started raising funds to develop a L1 blockchain.
The project has three co-founders, who go by the pseudonyms Smokey the Bera, Homme Bera and Dev Bear.
According to crypto research firm Revelo Intel, Smokey started his career in the biotech and healthcare industry before transitioning to crypto in 2015-2016.
In April 2023, Berachain raised $42 million in seed funding from Polychain Capital, Hack VC, Shima Capital, Robot Ventures, Goldentree Asset Management, and others.
A year later, Berachain raised $100 million in a Series B funding round led by Brevan Howard Digital and Framework Ventures, in one of the biggest crypto investment deals of 2024.
Analyst & Expert Views on Berachain
After co-leading a $100 million Series B funding round in Berachain, Canada-based crypto investment firm Framework Ventures said in April 2024:
“They’ve basically built a blockchain that allows users to directly incentivize certain apps and industries to build on their chain, which is a fascinating model for ecosystem growth that we’ve never seen before.There’s a reason 200+ apps have committed to build on the chain.
“Since launch two months ago, Berachain’s testnet has become the most used in blockchain history, with 300k+ users and ~1M transactions processed within its first 48 hours live. The testnet has now has 8M+ unique wallets and 100 million transactions processed.”
Meanwhile, crypto research firm Revelo Intel in an email newsletter:
“Proof of liquidity effectively turns liquidity into security and provides stakeholders with economic incentives and control over the ecosystem, encouraging sustainable growth and usage of the network.
“When it comes to ecosystem growth, Berachain focuses on empowering builders through proof of liquidity, reducing friction, and increasing the quality of life for developers.”
The Bottom Line
The crypto community is eagerly awaiting Berachain’s mainnet launch. If you want to explore the Berachain ecosystem, you can join over 635,000 active wallets (as of August 1, 2024) in trying out Berachain’s Artio Testnet which currently hosts a decentralized exchange (DEX), native stablecoin, lending platform and governance station.
