PoL v2: Core Breakthroughs and Industry Insights of Berachain

Paradigm Shift in Mainnet Asset Value Models

Berachain attempts to solve the long-standing "mainnet asset dilemma" of public chains through the PoL (Proof of Liquidity) mechanism. The key adjustment in the PoL v2 version is the shift of 33% of DApp incentives from BGT stakers to BERA stakers. This seemingly minor change actually represents a significant 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 introduces a "dual channel allocation" (67% BGT / 33% BERA), allowing main coin holders to earn protocol layer returns without participating in complex DeFi strategies for the first time, essentially completing the upgrade from "Gas token → yield asset."

The Intricacies of Mechanism Design

1. Non-inflationary returns: v2 has not increased the issuance of tokens, but has restructured the flow of existing incentives, allowing BERA to obtain chain-level cash flow. Currently, approximately $50,000 to $120,000 in incentives is directly injected into the BERA staking pool each week, creating sustained buying pressure.

2. BGT Ecological Niche Protection: Retaining 67% of incentives for BGT stakers, maintaining the "1 dollar → 1.x dollar" incentive leverage effect, while avoiding liquidity runs by governance token holders.

3. Triple Positive Feedback Loop:

   • More BERA staking enhances chain security
   • Higher staking rates reduce circulating chips
   • Incentive returns from a smaller circulation volume for the unit BERA.

Potential Impact of Market Structure

1. For regular users: low-threshold profit capture Ordinary users only need to stake BERA to obtain two types of returns:

   • Direct yield: 33% incentive distribution (estimated APY around 9-15%)
   • Indirect income: native DEX protocol revenue dividends

2. For Developers: New Gameplay of Main Coin Economy The project party can utilize the revenue attributes of BERA to design new mechanisms, such as:

   • Automatically convert protocol income into BERA for repurchase
   • Develop the BERA-based veToken model
   • Create derivative agreements collateralized by BERA

3. To investors: The reconstruction of the valuation model The market cap/TVL ratio of Berachain is currently 0.31, significantly lower than other new public chains. As BERA gains chain-level revenue capabilities, its valuation logic may transition to "cash flow discounting":

   Theoretical market value = ( Annual income of the chain × Price-earnings ratio multiple ) + ( Gas demand × Inverse of circulation velocity )

Based on the current weekly incentive of $100,000, the annualized return of $5.2 million corresponds to a 20x PE, implying an implicit valuation of $104 million, not accounting for Gas consumption and future income growth.

Risks and Challenges

1. Short-term gaming risk: Some BGT stakers may shift to other ecosystems due to incentive dilution.
2. Complexity of mechanisms: Ordinary users still need to understand the interaction between PoL/BGT/BERA.
3. Regulatory uncertainty: The compliance of the incentive mechanism is yet to be tested.

Industry Insights: L1 Competition Enters the Deep Waters of Value Distribution

The exploration of Berachain reveals a trend: the competitive focus of the next generation of public chains is shifting from performance and Gas fees to value distribution efficiency. While other public chains attempt to distribute profits or support prices through various means, PoL v2 demonstrates a more native solution—injecting ecological value directly into the main currency through protocol layer design.

If this model can be continuously validated, it may trigger other L1 projects to follow suit. In the current context where liquidity mining bonuses are fading, "how the chain creates real demand for itself" has become a key proposition that determines the life and death of projects. Berachain's answer is: let the main coin be the primary beneficiary of ecological prosperity.