PoL v2: Berachain's groundbreaking innovation

A New Paradigm for Value Capture in Public Chains

Traditional public blockchains have long faced the "mainnet asset dilemma" – while major tokens perform key functions, they struggle to directly capture the value generated by ecosystem growth. Berachain attempts to address this issue through its unique PoL(Proof of Liquidity) mechanism. The latest v2 version introduces significant changes: 33% of DApp incentives have been shifted from BGT stakers to BERA stakers. This seemingly minor adjustment actually marks a substantial shift in the value model of mainnet assets.

Although PoL v1.0 successfully promoted the total locked value of the ecosystem ( TVL ) growth, the returns mainly flowed to BGT and its derivatives. The v2 version introduces a "dual-channel allocation" mechanism, allowing main coin holders to receive protocol layer returns without participating in complex DeFi strategies for the first time, essentially completing the upgrade of BERA from a mere Gas token to a revenue asset.

Innovations in Mechanism Design

1. Non-inflationary returns: v2 has not increased the issuance of new tokens, but has created blockchain-level cash flow for BERA stakers by reallocating existing incentives. Incentives of approximately $50,000 to $120,000 are injected directly into the BERA staking pool each week, creating a continuous buying pressure.

2. Balanced Ecosystem: Retaining 67% of the incentives for BGT stakers while maintaining the project’s "1 dollar turns into 1.x dollars" incentive effect, avoiding large-scale withdrawals by governance token holders.

3. Triple Positive Feedback Loop:

   • BERA staking increases chain security
   • A higher staking rate reduces circulating chips
   • The incentive effect of the BERA unit is amplified by the reduction in circulation.

Potential Impact of Market Structure

1. For ordinary users: low-threshold earning opportunities Ordinary users only need to stake BERA to obtain dual rewards:

   • Direct Income: 33% incentive distribution (estimated annual yield of 9-15%)
   • Indirect revenue: native DEX protocol income dividends

2. For Developers: The Innovative Space of Main Currency Economy Project parties can utilize BERA's new attributes to design innovative mechanisms, such as:

   • Automatically convert protocol revenue into BERA for repurchase
   • Develop the veToken model based on BERA
   • Create a derivatives agreement with BERA as collateral

3. For investors: Redefinition of valuation models As BERA gains chain-level revenue capabilities, its valuation logic may shift towards a "discounted cash flow" model: Theoretical Market Value = ( Annual Income of the Chain × Price-to-Earnings Ratio ) + ( Gas Demand × Reciprocal of Circulation Speed )

Challenges Faced

• Short-term speculation risk: Some BGT stakers may shift to other ecosystems due to reduced incentives.
• Complexity of Mechanisms: Ordinary users still need to understand the complex relationships between PoL, BGT, and BERA.
• Regulatory uncertainty: The compliance of the incentive mechanism is yet to be tested.

Industry Insight: L1 Competition Enters a New Stage of Value Distribution

Berachain's innovation indicates that the competitive focus of the next generation of public chains is shifting from performance and low cost to value distribution efficiency. While other public chains explore different ways to distribute ecological benefits, PoL v2 demonstrates a more direct solution—injecting ecological value directly into the main coin through protocol layer design.

If this model can continuously validate its effectiveness, it may inspire imitation from other L1 projects. In the current environment where liquidity mining rewards are fading, "how to create real demand for public chains" has become the key to determining the success or failure of a project. Berachain's answer is: make the main coin the biggest beneficiary of ecological prosperity.