Disclaimer: This post contains thoughts on crypto, a volatile and risky asset class. It is not investment advice, and you should do your own research. All information is for educational purposes only. Please don’t take risks with money you’re not willing to lose.

While now largely a flavor of the past, NFTs once represented a flourishing sector. Tokenizing art, usually in the form of a 10,000 piece collection, they promised community, exclusivity, and provenance. Hindsight is 20/20, but the lion’s share of projects no longer exist, having been abandoned by founders and members alike. So what went wrong?

From my stint trading jpegs, it was more often not that teams would overpromise and underdeliver. Hyped launches meant shoving extensive roadmaps down the throats of consumers in attempt to bootstrap maximum liquidity during the minting phase. These roadmaps quickly became the status quo, with nearly every project copy and pasting the same intangible benefits. Aside from blowing treasury funds on lame, unattended parties, most projects ultimately accomplished nothing, thriving only on temporary speculation in tandem with 2021’s risk-on environment.

Roots

While I’ve rightfully gone full doomer on NFTs, there are of course exceptions to the rule. Most will recall Bored Apes, who have now successfully built out a revenue-generating business by developing onchain gaming with Yuga Labs and DeFi via APE. Some might also know Pudgy Penguins, who sell toys in Walmarts across the world and are now building a new Layer 1 called Abstract. Lesser known yet now highly influential in their own right are Bong Bears. Yes, you heard me correctly.

Contrarian from inception, Bong Bears launched with only 100 items in order to accrue a small yet genuine community of builders / OG ecosystem participants. And unlike the unaccomplished and extractive 99% of other devs, the founders had been tinkering in the space since 2015, with their entry into NFTs merely acting as the foundation for much larger goals. Paying homage to Olympus-style mechanisms, they both grew and sustained community interest via rebasing. In DeFi jargon, this refers to dynamically adjusting token attributes based on specific conditions. More simply, it means multiplying collections such that price and scarcity reduce over time. The general motivation is gradual expansion that continually rewards loyalty. Being a bit of a technical barrier, this led to the curation of a community full of individuals on both sides of the bellcurve with meaningful intent to be value-additive. The rest is history.

What is Berachain?

With our lore out of the way, Berachain is an EVM-identical L1 incubated by what is now aptly named the Bera community. Seeking to solve the dichotomy between billions of dollars securing a chain and the generally minute liquidity present, Berachain employs a novel consensus mechanism known as Proof of Liquidity (PoL) to improve alignment at the protocol level. To better put this in perspective, having the safest network doesn’t matter if nobody uses or transacts upon it. In effect, the security is well, useless. Therefore, if incentives instead point in the same direction as users allocate capital, the “cold start problem” is avoided.

Tri-Token Model

Unlike traditional L1s that rely on a single token for everything, Berachain splits functionality across three distinct assets, each playing a specific role in the ecosystem and integral to understanding PoL.

• BERA is the native token, used for gas fees, staking, and securing the network.

• BGT is a non-transferable governance token that can only be earned through providing liquidity, key to shaping economic incentives.

• HONEY is an overcollateralized stablecoin, essential for lending markets, DEX pairs, and collateralized borrowing.

Proof of Liquidity

I’ve touched upon this concept in past writings, but as a TLDR, consensus mechanisms matter because they dictate how value moves within an ecosystem. For instance, Ethereum’s Proof of Stake (PoS) locks up billions in idle collateral to secure the network. The more ETH staked, the less vulnerable. In practice this has proven successful, but we’ve also seen liquidity perpetually fragmented across L2s as well as the need for LSTs (Liquid Staking Tokens) to reintroduce capital efficiency.

In contrast, Berachain’s PoL requires staked assets to remain liquid and actively deployed in DeFi protocols. Therefore, instead of validators simply improving security, liquidity provisioning is directly integrated into consensus.

Technicals

Block Production: Validators stake BERA, which determines how frequently they propose blocks. In other words, the amount of BERA staked is positively correlated with the frequency of block production.

Block Rewards: The size of a validator’s block reward isn’t solely determined by their BERA stake, but rather by a weighted amount of delegated BGT, which is only earned through providing liquidity.

Emission Distribution: Unlike traditional block rewards that go straight to validators, PoL emits BGT into reward vaults that then direct toward specific pools and applications. This effectively lets validators and developers collaborate to bootstrap liquidity.

Economic Flywheel

1. Validators & Apps Are Directly Aligned – Unlike other L1s, where dApps compete for external incentives, Berachain bakes them into its core mechanics.

2. A Sustainable Incentive Marketplace – Apps can bid for emissions by offering their own tokens in return for BGT allocations. This market-driven model replaces the inefficient, top-down liquidity mining programs seen on other chains.

3. Auto-Compounding for Liquidity Providers – Liquidity providers earn BGT, which they can delegate to validators that support pools they care about. This creates a self-reinforcing loop where participation directly improves network security and liquidity depth.

Ecosystem

With mainnet now having launched as of earlier this month, Berachain was and remains one of the most anticipated projects of this cycle. While builders have long been experimenting on the testnet, this milestone officially enables live deployments, bringing in real capital and giving PoL a true assessment. Current DeFi first-movers include Infrared and Dolomite, whereas other verticals still lack any real winners (yet).

Furthering ecosystem growth, Berachain is not only backed by several prominent VCs, but fortunate enough to have community-funded initiatives such as Build-A-Bera, a zero to one incubator akin to AllianceDAO. For example, they offer a 12-week curated program designed to assist startups in areas such as fundraising, protocol design, development, and user acquisition. A notable outcome of this is Kodiak Finance, who recently announced a $2 million seed round to develop the chain’s native liquidity hub.

By the Numbers

Despite only being live for a few weeks now, Berachain already ranks 6th amongst all L1s and L2s in total value locked (TVL).

While still early, meaningful activity is taking place onchain, with daily volume alongside transactions steadily trending upwards.

Lastly, although price action is not entirely indicative of potential long-term success, BERA currently sits just under $8.50, with a fully diluted valuation of ~$4.2b. As is the case with most new launches, airdrop participants including early investors, community, and the team likely unwinded portions of equity to reduce their risk exposure upon TGE. Since this expected nuke, BERA has steadily doubled amidst deteriorating macro and BTC’s bearish breakdown.

In Sum

All great startups find what separates them from the pack. For the Beras, that innovation is fundamentally redefining how blockchains can incentivize participation across validators, LPs, and applications. As more projects move from theory to execution, the above metrics suggest that Berachain’s economic design isn’t just novel, but that it’s working. Incentives aren’t a temporary bootstrapping mechanism, but the security itself, creating a sustainable emissions market that reshapes how DeFi protocols can scale without relying on external capital rotation. Of course nothing is a guaranteed success and perhaps we don’t even need anymore L1s, but the next few months will be crucial in proving whether Berachain can hold TVL, sustain a thriving app layer, and avoid the liquidity drain that has plagued countless predecessors. Opinions aside, it’s objectively pretty cool that this all started as a memetic experiment and has now evolved into a fully operational DeFi-native L1.