In 2025, Berachain has quickly become one of the main ‘hype’ chains in the Layer 1 blockchain space, because it also embraces one of the famous animals of the crypto space: the bear. But it goes further then this counterintuitive branding…
This article offers a look at what makes Berachain stand out, its potential challenges, and its unique propositions.
Berachain, an EVM-compatible Layer 1 blockchain that works with the innovative Proof of Liquidity (PoL) consensus mechanism that allows users to stake their assets while simultaneously utilizing them in DeFi dApps. The platform’s tri-token system, consisting of BERA (native token), BGT (governance token), and HONEY (stablecoin), carries its ecosystem.
Since its mainnet launch in early 2025, Berachain has grown significantly, supported by over $140 million in venture capital funding and a strong community backing. Interestingly, Berachain didn’t start as a blockchain project – it began as an NFT initiative named “Smoking Bears” in August 2021, consisting of 100 bears consuming cannabis. However, the project quickly pivoted to focus more comprehensively on DeFi solutions.
Smokey the Bera, the most publicly recognized co-founder and face of Berachain, had a successful career in scaling companies, particularly in the healthcare and biotech industries before diving into the blockchain world. Alongside Smokey, other key figures include pseudonymous co-founders such as Dev Bear and Homme Bera and a team of other Bera alts.
Not that long ago, it quickly became one of the most active testnets in history, with 8 million unique wallets and over 120 million transactions processed on the network.
“In the summer of 2021, we started to see the first NFTs that were actually interesting, like Parallel TCG, which were doing more than just 10,000 profile pictures. They were finding ways to embed some degree of utility and further value to an NFT itself. We thought maybe there could be something fun we could do here. There wasn’t a grand vision or endgame in sight – there were simply NFTs of bears.”
This review of Berachain (BERA) was created for informational purposes. This article is not intended for promotion.
At its core, the fat bera thesis is the belief that applications built with Proof-of-Liquidity (PoL) at the forefront will capture the majority of value in the Berachain ecosystem. But what is this new proof?
Proof of Liquidity (PoL) is a consensus mechanism that differs from the traditional Proof of Stake (PoS). Instead of merely locking tokens to secure the network, PoL allows users to stake their assets while keeping them active for DeFi use.
This means that while your assets are staked, they continue to contribute to the liquidity of the platform. Proof-of-Liquidity was developed to effectively make liquidity flexible.
Another major difference from delegated proof-of-stake or standard proof-of-stake is that when block rewards are produced on Berachain, they don’t just stay with the validator set.
When a block is produced, those rewards or liquidity incentives are directed to applications building on the ecosystem.
Berachain is fully compatible with Ethereum’s Virtual Machine (EVM). This compatibility means that existing Ethereum smart contracts and decentralized applications can operate on Berachain without any modifications. Developers can deploy Ethereum-based smart contracts on Berachain without any modifications.
The Berachain Ecosystem is a thriving network of innovative projects spanning various categories such as DeFi, gaming, NFTs, social, AI, and more. It provides a platform for developers and entrepreneurs to build and launch their projects on the Berachain blockchain. Some of these include:
The Berachain ecosystem is home to a wide array of innovative projects, including:
Berachain incorporates a tri-token system, each serving distinct functions:
BERA is the native token of Berachain, serving multiple critical functions. It is used to pay for transaction fees and to stake for validating blockchain activities. BERA has a total initial supply of 500 million tokens, with an annual inflation rate of approximately 10% due to governance-related emissions.
This is the native gas token of the chain used to pay network fees. It’s a simple, vanilla gas token. Notably, at any point, 1 BGT can be burned into 1 BERA (irreversibly).
Berachain’s native token, BERA, has a genesis supply of 500 million tokens. The distribution strategy is designed to give back to the key stakeholders.
The allocation of BERA tokens is divided into three main categories:
By strategically distributing tokens among these key groups, Berachain aims to create a vibrant and engaged ecosystem that encourages participation, innovation, and long-term sustainability.
BGT is a non-transferable, soulbound token that users earn by providing liquidity through approved reward vaults.
Holders of BGT can participate in governance decisions by voting on network proposals and delegating voting power. The interesting aspect of BGT is that it is entirely illiquid and cannot be market bought on exchanges. The only way to obtain BGT is by providing liquidity to an approved application in the ecosystem.
BGT is Berachain’s governance token that cannot be bought or transferred. The only way to earn BGT is by providing liquidity and staking LP tokens in whitelisted reward vaults.
The amount of BGT rewards earned depends on:
Currently, there are three default reward vaults from Berachain’s native dApps:
To earn BGT, provide liquidity in one of these vaults, receive the LP token, and stake it in the corresponding reward vault. The list of vaults will expand over time.
In the Berachain ecosystem, validators receive incentives from applications in exchange for allocating a portion of their block rewards (inflationary rewards) to those applications. These rewards are then passed on to the application’s users.
This inverts the traditional model where:
Instead, in Berachain:
Honey is Berachain’s native stablecoin designed to provide liquidity and stability to the ecosystem. Users can easily convert their favorite stablecoins into Honey and leverage liquidity incentives.
Minting Honey is a simple process:
To redeem Honey back to your original stablecoin:
BeraChain currently has a Total Value Locked (TVL) of $103,600,792 in its liquidity pools. This impressive figure demonstrates the growing adoption and usage of the BeraChain ecosystem.
BeraChain has passed other L2s like Arbitrum in total value locked (TVL), with around $3.5-3.8 billion. Even after removing the portion from Voyager, there’s still about $1 billion+ that flowed in post-launch.
Berachain’s community-focused airdrop strategy rewarded early supporters and contributors: Date: February 6, 2025. Total Value: $647 million
The process for claiming the airdrop varies by category:
Testnet users, social airdrop, and ecosystem NFT recipients can check their allocation and claim by associating a wallet address at https://checker.berachain.com
However, the airdrop registration has ended, so no new claims can be made at this time.
Bridging assets to Berachain is powered by LayerZero and Stargate Finance. Simply visit bridge.berachain.com to move your tokens from other chains to Berachain.
You can stake BERA tokens through two main methods:
Before you can stake, you need to acquire BERA tokens. Purchase them from exchanges that list BERA or participate in network activities that might reward you with tokens.
Follow the specific instructions provided by your chosen validator or staking service to stake your BERA tokens. This process typically involves:
If interested, you can also participate in liquidity incentives by providing liquidity to the ecosystem. This not only helps in securing the network via the Proof-of-Liquidity (PoL) consensus but also earns you additional BERA tokens as rewards.
From learning and insights from their early community members and other blockchains, Berachain asked themselves:
By answering these questions, Berachain found success through its innovative Proof of Liquidity mechanism, with impressive metrics of 3 million users and 10 million transactions within five days of mainnet launch. Backed by leading venture capital firms, the platform secured over $3 billion in Total Value Locked (TVL), establishing itself among the top blockchain networks. Currently a popular place to farm some yield.
Berachain has evolved from a simple NFT project to a groundbreaking Layer 1 blockchain by solving a critical challenge: making staked assets productive while securing the network. Its success – reaching $3B in TVL and 3M users within days of launch – suggests that its Proof of Liquidity model could represent the next step in blockchain’s evolution.
Disclaimer: Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.
