PoL v2: The Value Closed Loop Breakthrough of Berachain

The Relationship Between Mainnet Assets and Ecological Value

Traditional public chains have long faced the "mainnet asset dilemma", where the main tokens, while serving Gas and consensus functions, struggle to directly capture the growth of ecological value. Berachain attempts to address this issue through its PoL (Proof of Liquidity) mechanism, making significant adjustments in the v2 version: 33% of DApp incentives are shifted from BGT stakers to BERA stakers. This seemingly minor change actually represents a major shift in the value model of mainnet assets.

Although PoL v1.0 successfully promoted the growth of ecological TVL, the incentives mainly flowed to BGT and its derivatives. The v2 version introduced a "dual-channel allocation" mechanism, allowing main coin holders to earn protocol layer returns without participating in complex DeFi strategies for the first time, upgrading the main coin from a simple Gas token to an income-generating asset.

Highlights of Mechanism Design

1. Non-inflationary returns: v2 has not increased the issuance of tokens, but rather redistributes existing incentives to create chain-level cash flow for BERA. Approximately $50,000 to $120,000 in incentives are directly injected into the BERA staking pool each week, creating sustained buying pressure.

2. BGT Ecological Niche Protection: Retain 67% of the incentives for BGT stakers to maintain the incentive effect of the project while avoiding liquidity runs by governance token holders.

3. Triple Positive Feedback Loop:

   • Staking BERA increases chain security
   • Higher staking rates reduce circulating chips
   • The incentive effect of the BERA unit is amplified by the reduction in circulation volume.

Impact on Market Structure

1. Retail investors: lower participation threshold Ordinary users only need to stake BERA to receive direct incentive distribution (APY approximately 9-15%) and native DEX protocol income dividends, greatly simplifying the participation process.

2. Developers: New Opportunities in Main Coin Economy The project team can utilize the revenue attributes of BERA to design new mechanisms, such as automatically converting protocol income to BERA buybacks, developing a BERA-based veToken model, etc.

3. Investors: Reconstructing Valuation Models After BERA achieves chain-level yield capabilities, its valuation logic may transition to "discounted cash flow." Currently, Berachain's market cap/TVL ratio is 0.31, significantly lower than other new public chains, indicating potential upside.

Challenges Faced

• Short-term speculation risk: Some BGT stakers may shift due to reduced incentives.
• Complexity of mechanisms: Users still need to understand the interrelation between PoL, BGT, and BERA.
• Regulatory uncertainty: The compliance of the incentive mechanism is yet to be tested.

Industry Trend Insights

Berachain's exploration indicates that the competition among the next generation of public chains is shifting from performance and gas fees to value distribution efficiency. PoL v2 demonstrates a native solution that directly injects ecological value into the main token through protocol layer design. If this model continues to be validated, it may trigger other public chains to follow suit, as creating real demand for the public chain itself has become crucial for project survival in the context of diminishing liquidity mining rewards. Berachain's answer is: make the main token the primary beneficiary of ecological prosperity.