Berachain’s ‘Proof of Liquidity’ Goes Live Today, Governance Proceeds to Phase 1

Berachain, an EVM-based Layer-1 blockchain, has initiated a significant change in its operational structure, activating its proof-of-liquidity (PoL) system and progressing to Governance Phase 1 on March 24.

This move represents a departure from traditional blockchain models, as Berachain aims to prioritize liquidity provision within its network.

Berachain alters blockchain incentive structures with its new PoL system, diverging from conventional models.

While at its core, Berachain operates as a proof-of-stake (PoS) blockchain, built on the Cosmos SDK and utilizing a Tendermint-based consensus mechanism – where validators stake Berachain (BERA) tokens to secure the network, propose blocks, and vote on transactions – PoL extends this foundation.

Everything changes Monday. On March 24th, PoL goes live, and governance proceeds to Phase 1.

Incentives start flowing. New vaults start getting emissions.

Here’s what changes and what's next. pic.twitter.com/wkw10CkWWf

— Berachain Foundation (@berachain) March 20, 2025

PoL strategically realigns economic incentives among validators, applications, and users, achieved through a dual-token system: BERA for chain security and the Bera Governance Token (BGT) for governance and rewards.

Unlike traditional PoS systems that primarily reward validators, Berachain’s PoL directs network incentives towards the crucial goal of enhancing ecosystem liquidity, prioritizing overall network health and dynamism.

The PoL activation kicks off the distribution of rewards to newly created reward vaults – smart contracts where users can deposit their PoL eligible assets to receive BGT rewards.

This step comes after a controlled test phase within BEX, Berachain’s native decentralized exchange (DEX).

For BGT holders, this transition brings increased control and opportunities for earning. They now hold greater influence over how emissions are allocated, allowing them to support validators and earn protocol incentives.

The mechanics of the system involve protocols that offer incentive tokens to validators, thereby encouraging them to direct their BGT emissions to designated reward vaults. Users who support validators also benefit from these incentives, with a system in place to facilitate the distribution and claiming of rewards.

Governance Phase 1 marks the full activation of PoL, extending its benefits beyond BEX pools to encompass all protocols.

Looking ahead, Governance Phase 2 will focus on further decentralization, enabling BGT holders to propose and vote on network changes.

Since its launch in February 2025 on Boyco, a pre-launch liquidity platform, Berachain has experienced rapid growth, achieving a total value locked (TVL) of $3.1 billion, according to DefiLlama data.

As of March 24, the price of its BERA token approached $8, reflecting a 16.4% increase within the last 24 hours.

This surge in value is accompanied by a dramatic rise in trading activity, with daily trading volume exceeding $178.6 million, marking a 156% increase.

Prior to the launch of its mainnet, Berachain secured two significant funding rounds. In April 2023, the developers raised $42 million in a Series A funding round, valuing the project at $420.69 million, with Polychain Capital leading the investment alongside Hack VC.

One year later, in April 2024, Berachain raised an additional $100 million in a round co-led by Polychain Capital and Framework Ventures.

We're thrilled to announce our $100M Series B round, co-led by @BHDigitalAssets and @hiFramework pic.twitter.com/yyDKmpBN7u

— Berachain Foundation (@berachain) April 12, 2024

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