Berachain Launches Its Proof of Liquidity (PoL) Mechanism to Decentralize the Supply of BGT

The PoL mechanism is designed to decentralize the supply of BGT, Berachain's governance token, and enable more robust onchain governance.

Berachain, a blockchain platform, is introducing a Proof of Liquidity (PoL) mechanism to decentralize the supply of its governance token, BGT, and promote more robust onchain governance.

Initially launching in select DeFi liquidity pools, the PoL system will expand into additional reward vaults beyond just DEX pools. Berachain operates with multiple native tokens: BERA for transaction fees and validator staking, and BGT, distributed as part of the PoL system. BGT is a non-transferable, soulbound token that can be earned by providing liquidity for governance and directing rewards.

In contrast to traditional PoS chains where tokens are locked in a vacuum, Berachain's system encourages users to stake assets in DeFi liquidity pools to earn BGT. Validators depend on the BGT delegated to them to strengthen their influence in the network's consensus.

This system integrates liquidity provision directly into the network's security, ensuring that the blockchain's integrity is supported by the liquidity of its users. The liquidity providers' staked BGT is not only used to validate transactions but also to guide the network's governance.

While Berachain operates with a PoS consensus mechanism, the PoL system offers a new approach by reimagining the role of staked assets in governance and security. The system allows validators to earn BGT emissions based on the amount of BGT liquidity providers delegate to them. The more BGT they control, the more influence they gain in shaping the network's future and optimizing their rewards.

Berachain's pre-launch liquidity platform, Boyco, was used to build liquidity for dApps within the Berachain ecosystem ahead of its mainnet launch in February. The launch proved successful, and by the time Boyco concluded, Berachain had attracted $3 billion in TVL and achieved an exit valuation of $420.69 million.

Earlier in 2023, Berachain secured $42 million in a Series A funding round led by Polychain Capital and Framework Ventures, marking a total of $100 million raised to date.