Berachain Introduces 'Liquidity Proof' Mechanism for Enhanced Decentralized Governance

Berachain is introducing the subsequent stage of its proof-of-liquidity mechanism, broadening governance and emissions to encompass more than just its native BEX pools.

Until now, Berachain's (BERA) native exchange, BEX, was the sole platform used for distributing rewards. Starting on Mar. 24, other decentralized applications will have the opportunity to request incentives through new reward vaults, as stated in Berachain's official declaration. This development will enable them to grow by attracting liquidity.

Several liquidity pools from different decentralized finance platforms have been incorporated into the initial set of vaults, with more to be added in the future. This move has created a more open system where users have greater influence over the allocation of incentives and projects compete for rewards.

In contrast to traditional proof-of-stake blockchains, where users lock up tokens for security and staked tokens are often unavailable for lending or trading, Berachain's PoL model allows assets to remain active in DeFi. Network activity is limited in PoS systems because staked tokens are frequently not available for lending or trading.

Berachain's system ensures that validators return a portion of their rewards to the network rather than keeping them all. These rewards are given to applications that increase activity on the blockchain and aid in its expansion. The governance token, BGT, grants holders the power to vote on which validators and projects receive support, thereby influencing the distribution of these rewards.

The first approved vaults primarily focus on DEX liquidity pools, which enable users to swap tokens with ease. These pools were chosen based on their liquidity, security, and significance to the network. Among the first approved vaults are liquidity pairs on BEX, Kodiak, Beradrome, and other protocols that feature key assets such as BERA, HONEY, and BGT, as well as major stablecoins.

Since launching its mainnet on Feb. 6, Berachain has experienced rapid growth. The platform now boasts $3.1 billion in total value locked and nearly $1 billion in circulating stablecoins. The trading volume in February amounted to $1.9 billion, according to data from DefiLlama.

After hitting an all-time high of $18.82 following its launch, BERA has since dropped to its current range of $6.03- $6.93. As of Mar. 24, the network has a fully diluted volume of $3.37 and a market capitalization of $728 million. The new governance initiative is anticipated to draw more users and contribute to the continued growth of the blockchain.