Crypto Gloss

Berachain

Berachain mainnet launched February 6, 2025, delivering on nearly two years of NFT-driven community building (the Bong Bears NFT collection). The project attracted significant attention for three reasons: its deeply engaged NFT-based community, a genuinely novel consensus mechanism (Proof of Liquidity) that philosophically aligns validator incentives with DeFi liquidity provision, and its EVM compatibility allowing straightforward porting of Ethereum DeFi applications. By building liquidity mechanics into the base-layer consensus rather than as an application-layer layer incentive, Berachain attempted to solve the “mercenary liquidity” problem that plagues most DeFi protocols — where liquidity disappears when incentives end.

The Three-Token System

Berachain’s most distinctive feature is its three-token model:

BERA (Gas Token)

  • Transferable: Yes — freely traded on exchanges
  • How to get: Buy on exchanges; received as validator rewards
  • Price: Market-determined

BGT (Bera Governance Token)

  • Transferable: CANNOT be transferred or sold — “soulbound”
  • How to get: ONLY by providing liquidity to whitelisted dApps on Berachain
  • Can be burned: BGT can be burned 1:1 into BERA (one-way, irreversible)

HONEY (Native Stablecoin)

  • Transferable: Yes — freely traded
  • How to get: Mint by depositing approved collateral (USDC), or buy on DEX
  • Design: CDP (Collateralized Debt Position) similar to DAI/MakerDAO

Proof of Liquidity (PoL) Consensus

Core idea: Instead of validators staking tokens to secure the network (standard Proof of Stake), validators on Berachain must attract delegated BGT from users to earn the right to propose blocks.

The full cycle:

  1. Users provide liquidity to whitelisted DeFi dApps on Berachain
  2. In return, users receive BGT (Bera Governance Token) — the only way to get BGT
  3. Users delegate their BGT to validators they want to support
  4. Validators with more delegated BGT get higher chance of being selected to propose blocks
  5. Validators earn block rewards in BERA
  6. Validators can choose how to distribute a cut of rewards back to the BGT delegators + LP pools that supported them

Flywheel:

  • More liquidity → more BGT emitted → more validators can attract → better network functioning
  • Validators compete to attract BGT by offering higher % reward share or “bribes” (similar to Curve/Convex bribe mechanics)
  • Users decide which validators to delegate to based on the rewards those validators direct back to specific LP positions

Berachain Native DeFi (BEX, Berps, BendDoge)

BEX (Bera Exchange):

  • Berachain’s native AMM DEX (similar to Uniswap)
  • LP positions in BEX pools earn BGT
  • Concentrated liquidity pools

BERPS (Bera Perps):

  • Native perpetual futures exchange
  • Trading generates fees that flow to the Berachain ecosystem

Bend:

  • Native lending protocol
  • Deposit HONEY or BERA to earn yield

HONEY Jar / Honeycomb:

  • Community infrastructure for NFT-based community building (leveraging the Bong Bears NFT heritage)

NFT-Based Origin: Bong Bears

Berachain grew out of one of crypto’s most engaged NFT communities:

Bong Bears (2021):

  • The original NFT collection — 9,420 pixelated bear NFTs
  • Community was the core; the NFTs gave access to the insider community

Bear ecosystem NFTs:

Bong Bears launched a series of derivative NFTs each tied to Berachain milestone announcements. Holders of the original received airdrops of each new derivative:

  • Bond Bears → Baby Bears → Band Bears → Bit Bears → Boo Bears

Each new NFT was a rebasing from the previous. Holding the full stack gave maximum BGT airdrop exposure at mainnet launch.

Community:

The “Bera” community became one of crypto’s most recognized subcultures — known for bear memes, community governance Discord, and deep ecosystem conviction through the 2+ year testnet period.

EVM Compatibility

Berachain runs on the Polaris EVM framework (developed by the Berachain team):

  • Full EVM compatibility: Ethereum Solidity contracts can be deployed with minimal changes
  • Ethereum tooling: Hardhat, Foundry, Wagmi, Ethers.js all work
  • MetaMask compatible (add Berachain network)

Effect: Major DeFi protocols launched on Berachain at or near mainnet:

  • Kodiak (like Uniswap v3 concentrated liquidity)
  • Infrared Finance (BGT liquid staking — “vliquid BGT”)
  • Dolomite (lending/margin)
  • HoneySwap (additional DEX)

BGT Liquid Staking: Infrared Finance

A significant development shortly after mainnet: Infrared Finance introduced iBGT — a liquid, transferable wrapper for BGT.

Problem BGT has:

  • BGT is soulbound (non-transferable) — directly limits liquid markets

Infrared’s solution:

  • Users deposit BGT with Infrared
  • Infrared runs a validator node, delegates BGT, earns rewards
  • Users receive iBGT — a liquid ERC-20 representing their BGT position
  • iBGT is tradeable, usable as collateral, composable in DeFi

Analogy: iBGT:BGT :: stETH:ETH. Just as Lido created liquid staked ETH, Infrared created liquid governance power on Berachain.

Mainnet Stats (Feb–Jun 2025)

  • Launch date: February 6, 2025
  • TVL at launch: ~$1B (boosted by locked pre-mainnet liquidity)
  • TVL peak: ~$3B
  • Daily active users: Tens of thousands
  • BERA price at launch: ~$8-10

How to Use Berachain

  1. Get BERA via DEX or CEX: use to get USDC/ETH, bridge to Berachain
  2. Add Berachain network to MetaMask (ChainID: 80084 for testnet → mainnet chainID confirmed at launch)
  3. Bridge assets: Official Berachain bridge or third-party (LayerZero, Wormhole)
  4. Provide liquidity: BEX, Kodiak, or other DEX pools → earn BGT
  5. Delegate BGT to a validator of your choice
  6. Store BERA long-term:

Social Media Sentiment

Berachain generated extraordinary hype relative to its actual technical maturity at launch. The NFT community layer was real — the community was genuinely engaged in a way rare in crypto. The Proof of Liquidity mechanism is intellectually interesting — whether it actually solves anything vs. traditional PoS is debated. Skeptics argue PoL just adds complexity without solving the fundamental “validators should secure the network” goal. Believers argue it creates a unique alignment between chain security and DeFi liquidity depth that has network effects. The bribe market (validators competing for BGT delegation by offering rewards) very quickly resembled Curve Wars in its game-theoretic complexity. Post-launch reality: TVL declined significantly from peak as early liquidity mining rates fell, consistent with how most new chain launches fade after initial incentive periods. The BERA price fell substantially from launch highs. Whether Berachain builds lasting DeFi infrastructure or fades is the open question for the next 1-2 years.

Research

Buterin, V. (2022). Proof of Stake: The Making of Ethereum and the Philosophy of Blockchains. Seven Stories Press.

Saleh, F. (2021). Blockchain Without Waste: Proof of Stake. Review of Financial Studies, 34(3), 1156–1190.

Angeris, G., & Chitra, T. (2020). Improved Price Oracles: Constant Function Market Makers. Proceedings of the 2nd ACM Conference on Advances in Financial Technologies.

Leshner, R., & Hayes, G. (2019). Compound: The Money Market Protocol. Compound Finance.

Warren, J., & Bandeali, A. (2017). 0x: An Open Protocol for Decentralized Exchange on the Ethereum Blockchain. 0x Project.