PoL v2: The Value Closed Loop Breakthrough of Berachain

1. Core Innovation of PoL v2: Restructuring the Value Distribution Model

For a long time, mainstream public chains have faced the "mainnet asset dilemma" – although tokens like ETH and SOL bear Gas fees and consensus functions, they struggle to directly capture the value brought by ecological growth. Berachain attempts to solve this issue through its PoL (Proof of Liquidity) mechanism, and a key improvement in the v2 version is the shift of 33% of DApp incentives from BGT stakers to BERA stakers. This seemingly minor adjustment actually represents a significant shift in the value model of mainnet assets.

PoL v1.0 successfully promoted the growth of ecological TVL, but the incentives mainly flowed to BGT and its derivatives. The v2 version introduced "dual channel allocation" (67% BGT/33% BERA), allowing primary token holders to earn protocol layer returns without engaging in complex DeFi strategies for the first time, essentially completing the upgrade of transforming Gas tokens into yield-bearing assets.

2. Exquisite Mechanism Design

1. Non-inflationary returns: v2 did not increase token issuance, but instead redistributed existing incentives, allowing BERA to gain chain-level cash flow. Data shows that currently, 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 incentives for BGT stakers, maintaining the "1 dollar → 1.x dollar" incentive leverage effect, while avoiding triggering liquidity runs by governance token holders.

3. Triple Positive Feedback Loop:

   • BERA staking increases chain security
   • The increase in staking rate reduces circulating tokens.
   • The incentive effect of reducing circulation volume amplifies the unit BERA

3. Potential Impact of Market Structure

1. For ordinary users: Lower the participation threshold. Ordinary users can now earn two types of rewards by simply staking BERA:

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

2. For developers: New opportunities in the main coin economy The project team can utilize the revenue attributes of BERA to design innovative mechanisms, such as:

   • Automatically convert protocol income to BERA for repurchase
   • Develop the BERA-based veToken model
   • Create a derivative agreement collateralized by BERA

3. For investors: Reconstruction of valuation models The current market cap/TVL ratio of Berachain is 0.31, far lower than other new public chains. As BERA gains chain-level earning capabilities, its valuation logic may transition to a "discounted cash flow" model:

   Theoretical Market Value = ( Chain Annual Income × Price Earnings Ratio Multiple ) + ( Gas Demand × Inverse of Circulation Speed )

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

4. Potential Risks and Challenges

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

5. Industry Insights: L1 Competition Enters a New Stage of Value Distribution

The innovation of Berachain indicates that the competition focus for the next generation of public chains is shifting from performance and low gas fees to value distribution efficiency. While other public chains attempt to allocate earnings or support prices in different ways, PoL v2 demonstrates a more native solution—directly injecting ecological value into the main token through protocol layer design.

If this model can be continuously validated, it may lead to other L1 projects following suit. In the current context where liquidity mining rewards are diminishing, "how to create real demand for public chains" has become the key to determining the success or failure of a project. Berachain's answer is: make the main coin the primary beneficiary of ecological prosperity.