Berachain's unique Proof-of-Liquidity mechanism will officially go live on March 24

expanding reward distribution beyond BEX pools to other apps and vaults

Berachain's unique Proof-of-Liquidity mechanism will officially go live on March 24, expanding reward distribution beyond BEX pools to other apps and vaults.

Announced by Berachain Foundation in a 21 March tweet, its PoL will go live next Monday with more vaults being introduced into the reward pool.

Originally, Berachain's (BERA) PoL launched within BEX pools only to distribute BGT in order to enable decentralized on-chain governance.

Now, this will be expanding to more apps and vaults which will be able to earn rewards. The first batch of Request for Reward Vault from apps has already been approved. For now, rewards will be limited to DEX pools but new vaults and use cases will be approved starting next week. For the Berachain governance token BGT, this means that they will now be able to decide where rewards will go.

Berachain's Proof-of-Liquidity mechanism

Berachain's blockchain aims to solve the misalignment of incentives in the Proof-of-Stake blockchains. In a typical PoS blockchain, users have to lock their tokens to secure the blockchain and earn staking rewards. While locking crypto is good for security, it’s bad for the blockchain’s economy because it means less crypto is being used in apps and transactions. As a result, users prefer to just stake their assets to get rewards than use DeFi apps.

Berachain was built to solve this dilemma between security and DeFi activity through its novel PoL consensus mechanism. In a typical PoS blockchain, validators earn rewards for validating transactions and pass a portion of those rewards to their delegators based on their stakes. However, on Berachain validators have to allocate most of their rewards—which are earned in BGT—to the app’s reward vault rather than keeping it all to themselves. This encourages applications to bribe validators—usually in the form of its native tokens—to incentivize them to send them more BGT. The end result is a competitive environment where validators are encouraged to support the best apps.

Meanwhile, Berachain's token BERA is trading at $6.35, down by 57% from its all-time high of $14.99 set on Feb. 6 at its launch. Since crashing from its post-launch peak to around $4 within just a few days, the price has been moving sideways in the range of approximately $4 – $5 until a bullish breakout to $9 between 18 – 21 of February, supported by an increase in volume. The momentum continued into early March, with the price hitting $9.2 before facing resistance and then pulling back. After that, the price gradually declined, stabilizing around the $6 support level. Volume has also tapered off, suggesting that traders are waiting for the next catalyst.