Berachain Launches “Proof of Liquidity” to Power Decentralized Governance

Berachain Launches “Proof of Liquidity” to Power Decentralized Governance

Berachain, an EVM-compatible Layer 1 blockchain, is set to launch its innovative Proof-of-Liquidity (PoL) mechanism later today, marking the first phase of its on-chain governance rollout. Designed to decentralize the distribution of BGT — Berachain’s soulbound governance token — the PoL system will initially integrate with select DeFi liquidity pools, with plans to expand to additional vaults in the near future.

The core idea behind PoL is to align network security with ecosystem liquidity. Unlike traditional Proof-of-Stake (PoS) models where assets are locked away for validator staking, Berachain allows users to contribute liquidity to DeFi pools without sacrificing the usability of their assets. In return, they earn BGT, a non-transferable token used to participate in governance and direct the network’s reward emissions.

Berachain features a unique multi-token structure. BERA serves as the gas and staking token, powering transactions and validator operations. BGT, on the other hand, is earned through liquidity provision and plays a pivotal role in governance. Validators depend on BGT delegations from liquidity providers to boost their influence, effectively tying block production and consensus power to user participation in the DeFi ecosystem.

Although Berachain utilizes a Tendermint-based consensus via the Cosmos SDK, the network’s PoL model reimagines what it means to stake — transforming liquidity provision into a mechanism for securing and governing the chain.

Validators also receive BGT emissions proportionate to the amount of BGT delegated to them. This incentivizes active community participation, while allowing validators to fine-tune their strategies for reward optimization and governance influence.

Berachain’s journey began with Boyco, its pre-launch liquidity hub, which aimed to bootstrap decentralized liquidity across the ecosystem. By the time liquidity transitioned to mainnet following its launch in February, Berachain had accumulated over $3 billion in total value locked.

The project has also attracted significant investor interest. In April 2023, Berachain secured $42 million in a Series A funding round led by Polychain Capital. A year later, it raised another $100 million in a follow-up round co-led by Polychain and Framework Ventures.

With PoL now live, Berachain is not just launching a governance system — it’s redefining the very foundation of blockchain consensus through community-driven liquidity.