Hotcoin Research | Can Berachain, the Emerging Public Blockchain, Sustain Its Momentum? Analysis and Outlook on Ecosystem Innovation and Development Potential
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Hotcoin Research | Can Berachain, the Emerging Public Blockchain, Sustain Its Momentum? Analysis and Outlook on Ecosystem Innovation and Development Potential
Berachain is redefining the relationship between security and liquidity within blockchain ecosystems through its innovative Proof-of-Liquidity (PoL) mechanism, tri-token model, and incentivized pre-deposit staking vault programs.
Navigating Web3 tides with focused insightsAuthor: Hotcoin Research
1. Introduction
The Layer1 blockchain space is no longer dominated solely by Ethereum. New public chains such as Solana, BNB, and Sui have emerged one after another, each seeking a share of the market. Berachain, a new public chain built on the Cosmos SDK and compatible with the Ethereum Virtual Machine (EVM), stands out with its unique incentivized pre-deposit vault campaign, innovative Proof-of-Liquidity (PoL) mechanism, and three-token economic model. These features not only fundamentally enhance on-chain liquidity utilization but also establish a win-win incentive system across the ecosystem. As a result, Berachain has rapidly become the sixth-largest blockchain network by Total Value Locked (TVL), securing a prominent position among emerging Layer1 platforms.
However, amid increasingly fierce competition in the Layer1 sector, can Berachain sustain its momentum? Will the PoL mechanism deliver a qualitative leap in security and liquidity? And how will the performance of various protocols and tokens within its ecosystem influence Berachain’s future trajectory? This report provides a comprehensive analysis from multiple perspectives—technological innovation, on-chain data, ecosystem token review, market opportunities, and challenges—to explore Berachain’s growth potential and development path.
2. Market Performance and Innovative Mechanisms of Berachain
Berachain launched its mainnet on February 6. Despite a volatile and generally bearish crypto market, Berachain's TVL has shown steady growth over the past month. According to DefiLlama, as of March 6, Berachain’s TVL reached $3.484 billion, ranking it sixth globally behind Ethereum, Solana, Bitcoin, BSC, and Tron in terms of ecosystem size.
Source: https://defillama.com/chain/Berachain
Berachain distinguishes itself through multiple innovations that restructure traditional blockchain economic models, enabling positive interactions between liquidity, governance, and security within a single system. Its core innovations can be summarized in three aspects:
1. Pre-Deposit Campaign: Building a Sustainable Liquidity Support System
During its testnet phase, Berachain launched an incentivized Boyco market pre-deposit vault program designed to maximize rewards for users before mainnet launch. By partnering deeply with protocols such as Concrete, Lombard, StakeStone, Ethena, and Etherfi, Berachain introduced reward-bearing pre-deposit vaults that allow users to lock in future rewards for BERA, BGT, and other ecosystem tokens prior to official launch. The program combines Berachain’s incentives with partner tokens (e.g., STONE, BAB, USDe, Concrete points), creating叠加收益 (stacked returns). Key benefits include:
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Gathering liquidity ahead of mainnet: Mitigates the typical “capital drought” faced by new blockchains during early stages, synergizing naturally with the PoL mechanism to lay a solid foundation for security and economic vitality.
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Multi-party incentive distribution: Collaboration with multiple DeFi protocols enables users to earn diversified token rewards, while protocol partners gain exposure and attract capital.
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Strengthening community consensus: The “pre-deposit rush” attracted massive user participation and funding, fueling ongoing discussions and creative content, laying strong groundwork in both community engagement and capital for post-launch prosperity.
For DeFi users, this represents a low-barrier entry point with multi-layered rewards; for protocols, it’s an ideal window to rapidly capture attention and capital. The Boyco model—combining “pre-deposits, mining, and ecosystem airdrops”—further boosted community enthusiasm. At its peak, the testnet recorded tens of millions of active addresses, with $1.57 billion in staked crypto assets, forming a substantial user base and capital pool.
Source: https://dune.com/zero_labs/berachain-pree-deposit-overview
2. Three-Token Model: Balancing Security and Liquidity
To further separate roles and balance incentives, Berachain adopts a three-token architecture:
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BERA: The core gas token used for transaction fees, staking operations, and internal ecosystem incentives. Similar to ETH on Ethereum or BNB on BNB Chain, BERA secures the network and pays for transactions. Validators must stake BERA to operate, earning block rewards in return.
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BGT: Used for on-chain governance, proposal voting, and reward allocation. Users earn BGT by providing liquidity to the ecosystem. Holding BGT directly determines a user’s voting power in governance decisions. BGT can be redeemed 1:1 for BERA, but BERA cannot be converted back into BGT. Thus, BGT cannot be traded—it can only be earned through liquidity contributions, functioning as the ecosystem’s “governance rights + reward points.”
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HONEY: Berachain’s native stablecoin, pegged 1:1 to the US dollar. Users can mint HONEY by collateralizing assets on Berachain platforms. As an on-chain stable currency, HONEY provides a reliable medium of exchange for decentralized applications, enhancing platform usability and attractiveness.
The advantages of this three-token model are:
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Optimized security and liquidity: The BERA staking mechanism ensures network security, while the BGT design incentivizes liquidity provision, avoiding the liquidity shortages often seen in traditional PoS systems.
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Fine-grained governance structure: The non-transferable nature of BGT ensures fairer distribution of governance rights, empowering those who actively contribute to the ecosystem and improving governance efficiency and decision quality.
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Enhanced ecosystem stability: HONEY serves as a stable unit of account, reducing transaction costs and risks for users within the platform.
3. PoL Mechanism: A Liquidity-Driven Consensus Model
Most traditional blockchains rely on Proof-of-Stake (PoS) or Proof-of-Work (PoW), using staking or computational power to secure the network. Berachain pioneers Proof-of-Liquidity (PoL), a novel consensus mechanism based on the principle of “liquidity as security.” This design aligns network security with liquidity growth, addressing the common issues of being “secure but unused” or “used but insecure.” The PoL workflow includes:
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Validators: Must stake at least 250,000 $BERA to become candidate nodes. Higher BERA stakes increase their probability of being selected to produce blocks (similar to lottery weights). Each block produced earns validators a fixed reward plus a variable reward—the latter distributed based on the proportion of BGT votes they receive from users.
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Users: Deposit liquidity into on-chain applications to receive LP tokens, which are then deposited into the official “reward pool” to claim daily BGT rewards proportional to their deposits.
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Voting: Users allocate earned BGT to validators of their choice, increasing the validator’s Boost score and thus their share of BGT rewards when proposing blocks. To attract more BGT delegations, validators share a portion of their rewards with users and ecosystem apps, creating a positive feedback loop and strengthening ecosystem synergy.
The core logic is: Validators want higher earnings → need to attract more user BGT votes → users only vote for validators who maximize their returns → validators must share rewards with users and dApps → ultimately forming a shared interest community among users, validators, and applications.
3. Review of High-Potential Projects in the Berachain Ecosystem
Although the number of live projects on Berachain remains limited, its impressive asset scale and user base provide a strong foundation for future ecosystem growth. Below is an analysis of top TVL projects on Berachain:
Source: https://defillama.com/chain/Berachain
1. Infrared Finance
As Berachain’s core liquidity and staking infrastructure, Infrared Finance leverages the native Proof-of-Liquidity (PoL) mechanism to offer efficient liquid staking and yield optimization via iBGT (liquid BGT) and iBERA. By staking various liquidity assets, users can participate in governance and earn high rewards. With over $1.8 billion in TVL, Infrared acts as a “value accumulator” within the ecosystem. As the mainnet matures, Infrared is poised to unlock further growth through innovative products and cross-protocol incentives.
2. Kodiak
Kodiak is Berachain’s native liquidity hub, using its “Island” mechanism to enable concentrated liquidity management—reducing risk while boosting capital efficiency. Integrated with projects like Infrared and Boyco, Kodiak achieved significant liquidity at launch. Managing around $1 billion in assets, its non-circulating governance token xKDK is expected to unlock upon full mainnet rollout, supporting decentralized governance. As a key trading and liquidity platform, Kodiak’s design and cross-project incentives give it strong growth potential.
3. Dolomite
Dolomite is a next-generation lending and leveraged trading platform on Berachain, combining traditional borrowing mechanics with PoL incentives. It has already drawn market attention through ecosystem rewards, currently holding $860 million in TVL. Going forward, Dolomite plans to issue a governance or incentive token to attract more lending and leveraged trading activity, unlocking significant value appreciation.
4. BEX
BEX is Berachain’s flagship decentralized exchange, serving as a primary trading gateway due to its low slippage and deep liquidity. Recent data shows steadily rising trading volume, contributing approximately $860 million to the ecosystem’s TVL. Future plans may include launching a dedicated incentive token and deeper integration with core products like Infrared, collectively driving growth in Berachain’s trading ecosystem.
5. Concrete
Concrete focuses on efficient lending and liquidity optimization. Its innovative design minimizes impermanent loss while maintaining stable TVL—currently managing about $760 million. Through synergistic collaborations with Kodiak and Infrared, Concrete contributes to a complementary and high-performance DeFi ecosystem.
6. Veda
A newcomer, Veda specializes in asset management and lending services, powered by Ether.fi’s technology. It emphasizes multi-asset aggregation and leveraged trading, currently holding around $600 million in TVL. With planned governance token issuance and multi-chain interoperability, Veda aims to grow steadily by meeting cross-asset management demand and solidifying its position within Berachain.
7. Beraborrow
Beraborrow is Berachain’s first CDP-style collateralized debt protocol, allowing users to pledge various assets to borrow NECT, a native stablecoin. Its innovation lies in the Continuous Protocol Incentive (CPI) mechanism, which rewards liquidity providers continuously based on long-term participation rather than one-time incentives. With over $400 million in TVL, NECT has become the second-largest stablecoin in the ecosystem.
4. Opportunities and Challenges Facing the Berachain Ecosystem
Opportunities
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First-mover advantage from technological innovation: Berachain’s PoL mechanism, three-token model, and pre-deposit vaults offer novel solutions for on-chain security and liquidity. Compared to traditional PoS chains, its “liquidity as security” philosophy enhances capital efficiency and attracts high-quality projects from DeFi, NFT, and GameFi sectors, establishing early ecosystem advantages.
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Cross-chain collaboration and ecosystem interconnectivity: Berachain holds unique strengths in cross-chain asset flow, having partnered with major chains like Ethereum and Solana to build bridges and multi-chain liquidity pools. This interoperability improves user experience and opens avenues for attracting additional capital and liquidity.
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Strong community and developer support: Thanks to its open, transparent roadmap and innovative incentives, Berachain has drawn significant developer and community involvement. During the testnet phase, independent addresses and daily active users grew exponentially, demonstrating robust community vitality and user stickiness—key foundations for rapid post-launch expansion.
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Capital backing and strategic partnerships: Berachain has secured investments from leading firms including Polychain Capital, OKX Ventures, and Framework Ventures. Strategic collaborations with top-tier protocols like Stakestone, Ethena, and Lombard provide substantial financial and resource support, ensuring smooth implementation and scaling of ecosystem incentives.
Challenges
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TVL gap compared to mature chains: While Berachain’s TVL reached $3.4 billion by March 2025, it still lags far behind established leaders like Ethereum and Solana. Attracting more DeFi protocols and users to increase locked asset volume remains a critical challenge.
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Technical and security risks: As a novel consensus model, PoL and the three-token system require real-world testing over time. Potential vulnerabilities in deployment, long-term effectiveness of liquidity incentives, and cross-chain interoperability must be continuously refined in practice.
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Market competition and user education: Competing against mature ecosystems like Ethereum, Solana, and BNB Chain requires significant effort in user onboarding, developer tooling, and community governance. Educating users on the new mechanisms and their benefits is essential to gain market trust and avoid FUD stemming from misunderstandings.
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Token inflation and investor sell-off risks: Large token unlocks from early private investors, combined with increased circulation from incentives, could create downward pressure. Balancing reward distribution with market supply and protecting long-term holder interests is a pressing concern.
5. Outlook and Summary: The Future Potential of Berachain
Berachain’s journey ahead is filled with both promise and obstacles. Below are key directions for future development:
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Ecosystem diversification and application expansion: Berachain will continue attracting high-quality projects across DeFi, NFT, and GameFi, fostering a diverse ecosystem. By refining its pre-deposit vaults and cross-chain collaboration frameworks, Berachain can overcome short-term liquidity fragmentation, achieving efficient capital aggregation and long-term retention.
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Capital market integration and strategic alliances: Deepening partnerships with leading blockchain projects and traditional financial institutions will help build a robust cross-chain liquidity network, enhancing competitiveness. Such collaborations can bring more TVL and users while boosting Berachain’s global recognition and supporting sustainable token value appreciation.
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Economic model refinement and incentive balance: To address inflation and sell-off risks, Berachain may introduce innovations like iBGT liquidity vouchers to better balance incentive distribution. Through technical improvements and governance upgrades, the token economy can remain healthy over the long term, reinforcing participant alignment and cooperation.
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Community building and outreach: Cultivating an open, inclusive, and tech-driven community is vital for Berachain’s sustained success. The team will intensify user education, employ transparent governance, and maintain proactive communication to dispel doubts, attract retail and institutional investors alike, and boost overall ecosystem activity and innovation.
Conclusion
In summary, Berachain is redefining the relationship between security and liquidity in blockchain ecosystems through its pioneering PoL mechanism, three-token model, and incentivized pre-deposit vaults. While it still trails behind dominant chains like Ethereum and Solana in terms of TVL and maturity, its demonstrated potential in capital efficiency, incentive transmission, and ecosystem diversity is undeniable. As stated in its whitepaper: “Berachain is not just another EVM chain—it’s a new continent of economic collaboration.”
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