From Liquidity Incentives to Value Circulation: The Core Breakthrough of PoL v2

Traditional public chains have long faced the "mainnet asset dilemma", where the main tokens, despite fulfilling key functions, struggle to directly capture the growth of ecological value. Berachain attempts to address this issue through its unique PoL (Proof of Liquidity) mechanism, while the core innovation of its v2 version lies in reallocating 33% of DApp incentives from BGT stakers to BERA stakers. This seemingly minor adjustment actually represents a significant shift in the value model of mainnet assets.

Although PoL v1.0 successfully promoted the growth of the total locked value (TVL) of the ecosystem, the incentives mainly flowed to BGT and its derivatives. The v2 version introduced a "dual channel allocation" mechanism (67% BGT/33% BERA), allowing main coin holders to earn protocol layer rewards without participating in complex DeFi strategies for the first time, essentially upgrading from a simple "Gas token" to a "yield asset."

Elaborate Mechanism Design

The design highlights of PoL v2 include:

1. Non-inflationary returns: Creating chain-level cash flow for BERA by restructuring existing incentive flows, rather than issuing new tokens.

2. BGT Ecological Niche Protection: Retain 67% of incentives for BGT stakers to maintain the incentive leverage effect for the project team, while avoiding triggering a liquidity run by governance token holders.

3. Triple Positive Feedback Loop:

   • BERA staking increases chain security
   • Higher staking rates reduce liquidity
   • The reduction in circulation amplifies the incentive effect of the unit BERA.

Potential Impact of Market Structure

1. For ordinary users: Lower the participation threshold Ordinary users only need to stake BERA to obtain direct (approximately 9-15% APY incentive distribution) and indirect (native DEX protocol revenue dividends) dual benefits.

2. For developers: New opportunities in the main coin economy The project party can use the revenue attributes of BERA to design innovative mechanisms, such as automatic repurchase, BERA-based veToken model, or derivative agreements collateralized by BERA.

3. For investors: Reconstruction of valuation models After BERA gains chain-level yield capabilities, its valuation logic may transition to a "discounted cash flow" model. Currently, the market cap/TVL ratio of Berachain is 0.31, far below that of other emerging public chains.

Challenges and Risks Faced

• Short-term speculation risk: Some BGT stakers may shift to other ecosystems due to reduced incentives.
• Complexity of Mechanism: Ordinary users still need to understand the complex relationship between PoL, BGT, and BERA.
• Regulatory uncertainty: The compliance of the incentive mechanism is yet to be verified.

Industry Insights: L1 Competition Enters a New Stage of Value Distribution

The innovation of Berachain indicates that the focus of competition among the next generation of public chains is shifting from performance and low cost to value distribution efficiency. While other public chains explore various ways of value distribution, PoL v2 demonstrates a more native solution—directly injecting ecological value into the main token through protocol layer design.

If this model can be continuously validated, it may trigger imitation by other L1 projects. In the current situation where the liquidity mining bonus has faded, how to create real demand for public chains has become the key to determining the success or failure of a project. Berachain's answer is: make the main coin the biggest beneficiary of ecological prosperity.