Berachain is a Layer-1 blockchain that aims to address key economic inefficiencies in existing blockchain networks.
It introduces a consensus model called Proof of Liquidity (PoL), which, as stated by the team, is designed to better align incentives between validators, liquidity providers, and decentralized applications (dApps).
What is Berachain?
The project’s whitepaper explains that while many Layer-1 blockchains focus on increasing transaction speed and reducing fees, they often struggle to sustain long-term network activity.
Berachain’s approach is to create an economic system where network security and liquidity provisioning are interconnected.
Instead of relying solely on staking for security, Berachain incorporates liquidity incentives, aiming to balance validator rewards with real network demand.
The blockchain features a dual-token model:
- BERA – The network’s native token used for gas fees and validator staking.
- BGT – (Berachain Governance Token) – A non-transferable rewards and governance token that is issued through staking BERA or providing liquidity in designated vaults.
The project claims that this structure ensures that validators, users, and developers are incentivized to contribute to the network in ways that go beyond traditional staking.
By linking validator rewards to liquidity provisioning and application usage, Berachain aims to increase engagement across the network.
How Berachain Works
Berachain operates on a consensus mechanism called Proof of Liquidity (PoL), which integrates liquidity provisioning with network security.
Unlike traditional Proof of Stake (PoS) systems, where validators are rewarded based on the amount of tokens staked, PoL ties validator rewards to both staked BERA tokens and liquidity contributions made to the network.
The blockchain features a dual-token model designed to separate governance and rewards from basic network utility:
- BERA – The gas token used for transaction fees and staking to activate validator nodes.
- BGT – A non-transferable governance and rewards token that is issued as block rewards and can be burned to acquire more BERA.
Validator Selection and Economic Incentives
Validators on Berachain are selected based on their BERA stake, with the top 69 validators forming the active set.
However, unlike traditional PoS models, where rewards are distributed based on stake alone, Berachain validators receive rewards based on their BGT boost, which reflects their participation in the network’s liquidity economy.
Validators who contribute more to the ecosystem by facilitating liquidity can access higher rewards.
To ensure decentralization, the network applies a diminishing returns model to validator rewards.
As a validator’s BGT boost increases, the marginal benefit of additional boosts decreases, which is intended to prevent excessive centralization of rewards among a few large validators.
Application-Level Integration
Berachain also incorporates reward vaults, which allow decentralized applications (dApps) to allocate incentives to users who provide liquidity or engage in specific activities.
These vaults function similarly to liquidity mining programs, but with a direct link to network-level block rewards. Applications can customize incentive structures, providing additional rewards in their native tokens or in BGT.
This mechanism is designed to create a cycle where liquidity provision benefits both dApps and validators, reinforcing economic activity on the network.
The ultimate goal is to align incentives between network participants, reducing reliance on external funding or unsustainable token emissions.
Benefits and Key Features of Berachain
Berachain is structured to address common inefficiencies in blockchain economics by linking validator rewards to network activity. The Proof of Liquidity (PoL) model introduces several key features:
Efficient Liquidity Utilization
Unlike traditional staking models, which primarily focus on network security, Berachain’s PoL mechanism integrates liquidity provisioning directly into the blockchain’s economic design.
Validators are incentivized to engage with liquidity pools, ensuring that network rewards contribute to real economic activity rather than passive staking.
Dual-Token Economic Model
Berachain separates economic utility and governance through its dual-token system:
- BERA is used for transaction fees, staking, and activating validator nodes.
- BGT serves as a governance and rewards token, earned through liquidity provisioning and validator participation.
This structure is designed to encourage liquidity provision while preventing governance centralization. Since BGT cannot be directly purchased or transferred, its value is tied to network participation rather than speculative trading.
Dynamic Validator Rewards
Validator rewards on Berachain are determined by both their BERA stake and BGT boost (which reflects their contribution to liquidity). This system is intended to create a more balanced rewards structure, ensuring that validators actively support ecosystem growth rather than relying solely on token staking.
Application-Level Incentives
Berachain includes reward vaults, which allow decentralized applications (dApps) to incentivize users for specific actions, such as liquidity provision or staking.
This model enables dApps to direct network emissions toward their communities, creating additional incentives for participation.
Adaptive Inflation Mechanism
The total supply of BERA is uncapped, with an annual inflation rate of 10%, subject to governance adjustments.
Since validator rewards are distributed based on liquidity participation, the system is designed to dynamically adjust incentives to match network demand.
How Berachain Differs from Traditional Proof of Stake (PoS) Blockchains
Many Layer-1 blockchains rely on Proof of Stake (PoS), where validators secure the network by staking tokens and earning rewards based on their stake size. While this model provides security, it does not always drive real economic activity within the ecosystem. Berachain’s Proof of Liquidity (PoL) model introduces several differences:
Validator Rewards Are Based on Liquidity, Not Just Staking
- In a standard PoS system, rewards are distributed to validators based on the amount of tokens they stake.
- On Berachain, rewards are influenced by a validator’s BGT boost, which reflects their contribution to network liquidity.
- Validators who stake BERA and engage with liquidity vaults can earn more rewards, incentivizing active participation rather than passive staking.
Application-Centric Incentives
- Traditional blockchains typically issue block rewards directly to validators, with applications relying on separate incentives (e.g., liquidity mining programs).
- Berachain integrates reward vaults at the protocol level, allowing applications to direct a portion of block rewards toward specific liquidity pools or user actions.
- This approach seeks to create a stronger link between network security and application growth, rather than relying on external incentives.
Non-Transferable Governance and Rewards Token
- Unlike standard governance tokens, which can be bought and sold on the open market, BGT can only be earned through staking or liquidity participation.
- BGT can be burned 1:1 for BERA, but the reverse is not possible, meaning governance power is tied to active participation rather than speculation.
BERA Tokenomics
Berachain’s economic model is built around two tokens:
- BERA – The primary utility token, used for gas fees, staking, and validator participation.
- BGT – A non-transferable governance and rewards token earned through staking BERA or participating in liquidity vaults.
The token supply details are as follows:
- Genesis Total Supply: 500,000,000 BERA
- Max Supply: No fixed cap (subject to 10% annual inflation based on governance decisions).
- Circulating Supply at Listing: 107,480,000 BERA (21.50% of the total genesis supply).
- HODLer Airdrop Allocation: 10,000,000 BERA (2% of total genesis supply).
The Berachain model allows for ongoing issuance of BERA, with governance determining future supply adjustments.
Token Distribution and Airdrop Allocation
The initial distribution of BERA tokens includes:
- 21.5% circulating supply at launch, with the rest released over time.
- 2% allocated for HODLer Airdrops, distributed to BNB holders through Binance Simple Earn.
- Additional 5,000,000 BERA reserved for marketing campaigns, released in batches 12 months after listing.
Since Berachain’s token supply is inflationary, governance decisions on emissions and reward mechanisms will play a role in determining long-term value retention.
Utility of BERA and BGT
The Berachain ecosystem separates transactional functions from governance using its two-token model:
Token | Utility |
---|---|
BERA |
|
BGT |
|
This structure is intended to reduce governance speculation and tie participation directly to network engagement. However, the long-term impact of a non-transferable governance token on user adoption and liquidity incentives remains a factor to watch.
Inflation and Supply Considerations
Berachain has a 10% annual inflation rate, which introduces ongoing emissions into the system. These emissions are distributed primarily to:
- Validators (through PoL incentives).
- Liquidity providers who stake in reward vaults.
- The broader ecosystem, based on governance allocations.
How to Receive the BERA Airdrop on Binance
Binance HODLer Airdrops is a program that distributes free tokens to users who hold and subscribe BNB to Simple Earn products.
Instead of requiring active staking or trading, users automatically qualify for token airdrops based on historical snapshots of their BNB balances.
This system differs from Launchpool, where users must manually stake tokens to farm rewards. With HODLer Airdrops, users simply hold BNB in Simple Earn, and Binance allocates new tokens based on their BNB balance.
For the Berachain airdrop, Binance has allocated 10,000,000 BERA tokens (2% of total genesis supply) to be distributed among eligible participants.
Steps to Qualify for the BERA Airdrop
Users who subscribed their BNB to Simple Earn before the snapshot deadline are automatically included in the airdrop process. Those who did not participate during the specified period are not eligible for the distribution.
To have qualified for the BERA HODLer Airdrop, users needed to follow these steps:
First, they had to subscribe their BNB to Simple Earn products, which are available under the Earn section on Binance.
Both Flexible and Locked Simple Earn products were eligible. Flexible subscriptions allow users to withdraw BNB at any time, while Locked subscriptions provide potentially higher yields in exchange for a fixed holding period.
Once subscribed, users had to maintain their BNB holdings between January 22 and January 26, 2025, as Binance used random historical snapshots to calculate the airdrop distribution.
The hourly average BNB balance held in Simple Earn products was used to determine how many BERA tokens each user received.
Binance also imposed a holding cap of 4%, meaning if a user’s BNB holdings exceeded 4% of the total subscribed BNB pool, only 4% of the total would be counted toward their airdrop allocation.
After the snapshot period ended, Binance finalized the distribution calculations, ensuring that eligible users would receive BERA tokens in their Spot Wallets before trading starts. No further actions are required on the user’s part.
» Register on Binance to receive future airdrops «
When and Where Will BERA Be Distributed?
Users who qualified for the HODLer Airdrop will receive BERA tokens directly in their Binance Spot Wallets before February 6, 2025 (13:00 UTC). Binance guarantees that the airdrop distribution will be completed at least one hour before the listing time, ensuring that users can access their tokens before trading begins.
Once BERA is listed on Binance, it will be available for trading against multiple pairs, including BERA/BTC, BERA/USDT, BERA/USDC, BERA/BNB, BERA/FDUSD, and BERA/TRY. Users who receive the airdrop can choose to hold their tokens, trade them on the open market, or use them within the Berachain ecosystem once applications become available.
Why Participate in the HODLer Airdrop?
One of the main benefits of Binance HODLer Airdrops is that it allows users to receive new tokens without any additional cost or effort.
By simply holding BNB in Simple Earn products, users automatically gain access to new project tokens without needing to actively stake, farm, or trade.
Another advantage is the early exposure to new blockchain projects before they enter the market.
The airdrop provides a way to acquire BERA before its trading pairs go live, allowing users to decide whether to hold, trade, or explore its use cases once the Berachain mainnet is launched.
However, users should note that receiving an airdrop does not guarantee future value.
The price of BERA will be determined by market demand after it is listed on Binance, and its long-term adoption will depend on factors such as network activity, validator participation, and application development on Berachain. As with any new token, users should conduct their own research before making any financial decisions regarding their airdropped BERA tokens.