Berachain Faces Community Backlash Over Airdrop Favoritism, Devs Accused of Dumping Tokens

Just days after its mainnet launch and airdrop, the Berachain community is concerned about the project's visible favoritism toward private investors.

Berachain, a new layer-1 blockchain network, has garnered attention in the crypto community following its airdrop and mainnet launch last week. While the company boasts an ambitious vision to become a groundbreaking network with a unique ‘Proof of Liquidity’ mechanism, its marketing and hype have drawn comparisons to meme coin culture.

Prior to its launch, Berachain’s pre-launch liquidity platform managed to attract $2.3 billion in deposits. The network also commenced one of the largest airdrops of 2024 with its mainnet launch on February 6. Notably, BERA also secured a Binance listing immediately after TGE, along with several other major exchanges.

However, as soon as the airdrop occurred, users began complaining that testnet farmers received minimal BERA token rewards.

Berachain’s blockchain is designed as a self-contained system of three tokens: BERA, BGT, and HONEY, each serving different functions. However, by staking and burning different tokens, users can exploit the system.

“Wait, so all the huge insiders of Berachain, with locked BERA tokens, can stake the BERA, receive BGT, burn the BGT for BERA and then dump? Please tell me this isn’t true. It’s almost criminal,” one user wrote after the BERA tokenomics were revealed last week.

Ericonomic, an observer of Berachain’s blockchain ecosystem, compiled a thread of pressing concerns. Notably, more than 35% of the BERA token supply was allocated to private investors, and its inflation is significantly higher than most projects.

Additionally, private investors can stake BERA to earn liquid rewards that can be easily dumped. There are also concerns regarding one potential core developer dumping his BERA tokens.

“A cofounder (DevBear) is selling tokens from one of his doxxed addresses. He got around 200,000 BERA from the airdrop (this is a really bad thing since he, or the core, designed the airdrop) and then he swapped some of those tokens for WBTC, ETH, BYUSD, etc,” Ericonomic claimed.

Berachain developers failed to disclose the nature of their blockchain’s staking scheme until recently. Furthermore, although they claim that Berachain’s core product will be Proof of Liquidity, this hasn’t materialized yet.

All of these factors do make BERA’s long-term sustainability questionable. It might end up being as extremely volatile as non-utility meme coins.

“I’ve always seen Berachain as a breath of fresh air in a place full of scams, something with its own culture and good morals, and I’m not gonna lie—seeing this ‘bad’ launch and the ‘shady’ stuff makes me feel kinda sad. But the end, if the builders keep working as they have for the last few years, Berachain will succeed and become the best place to yield by far,” Ericonomic wrote.

As soon as the airdrop took place, BERA’s price began dropping like a rock. It fell over 50% from its intra-day peak post-airdrop, and it continued to struggle the next day.

Ostensibly, Berachain is attempting a novel type of blockchain project, but community confidence has been shaken, and that crisis has been reflected in its valuation.

Still, even despite these alarming trends, community members are not totally bearish in their predictions. There is still a lot of optimism around the Proof of Liquidity (PoL) mechanism. The network has significant developer support.

So, if PoL is implemented and the dev community remains committed to leveraging the novel architecture, Berachain could likely overcome these challenges in the long-term.