Hotcoin Research | Will the Hype for Emerging Blockchain Berachain Continue? An Analysis and Outlook on Ecosystem Innovation and Development Potential

I. Introduction

The Layer-1 blockchain landscape is no longer dominated solely by Ethereum, as various L1 chains — such as Solana, BNB Chain, and Sui — have emerged, competing for market share. Among them, Berachain, an emerging L1 built on the Cosmos SDK and compatible with the Ethereum Virtual Machine (EVM), has distinguished itself with its unique incentivized pre-deposit vault event, an innovative Proof-of-Liquidity (PoL) mechanism, and a tri-token system. These innovations fundamentally enhance on-chain liquidity utilization and establish a multi-party win-win incentive system, propelling Berachain to become the sixth-largest blockchain network by total value locked (TVL), securing a strong foothold in the competitive L1 sector.

However, in an increasingly crowded market, can Berachain’s momentum be sustained? Will the PoL mechanism bring a significant breakthrough in on-chain security and liquidity? How will the performance of various ecosystem protocols and tokens shape the network’s long-term trajectory? This report provides a comprehensive analysis of Berachain’s growth potential and future development path from multiple perspectives, including technological innovation, on-chain data, an overview of ecosystem tokens, and market opportunities and challenges.

II. Berachain’s Market Performance and Innovative Mechanisms

Berachain launched its mainnet on February 6. Despite the overall sluggishness of the crypto market, its on-chain TVL has demonstrated steady growth over the past month. According to DefiLlama, as of March 6, Berachain’s TVL had reached $3.484 billion, making it the sixth-largest blockchain ecosystem by TVL, behind Ethereum, Solana, Bitcoin, BSC, and Tron​.

Source: https://defillama.com/chain/Berachain

Berachain stands out by reconstructing the traditional blockchain economic model through multiple innovations, ensuring that liquidity, governance, and security interact positively within a single system. Its key innovations can be categorized into three major aspects:

1. Pre-Deposit Vault Event: Building a Sustainable Liquidity Support System

Berachain introduced an incentivized “Boyco Market Pre-Deposit Vault” event designed to maximize rewards for early participants before the mainnet launch. By collaborating with Concrete, Lombard, StakeStone, Ethena, Etherfi, and other protocols, Berachain allowed users to pre-deposit funds and lock in rewards in the form of BERA, BGT, and other ecosystem tokens even before the network went live. This initiative combined Berachain’s ecosystem incentives with partner protocol tokens (STONE, BAB, USDe, Concrete points, etc.), enabling users to stack multiple yield opportunities. The key benefits of this approach include:

• Bootstrapping liquidity before launch: It mitigates the common liquidity shortage that new blockchains face in their early stages and naturally integrates with the PoL mechanism, laying a strong foundation for security and economic activity.
• Multi-party coordinated incentives: By collaborating with various DeFi protocols, users receive a more diversified range of token rewards, while partner protocols benefit from increased user adoption and liquidity inflows.
• Strengthening community consensus: The “pre-deposit” model attracted a large user base and significant capital, sparking community discussions and user-generated content, which contributed to Berachain’s post-launch ecosystem growth.

For DeFi users, the pre-deposit + mining + airdrop model provided a low-barrier entry into Berachain while allowing them to earn multiple rewards. For participating protocols, it served as an excellent opportunity to gain visibility and attract capital. During the testnet phase, the number of active addresses peaked in the tens of millions, while the liquidity of staked crypto assets reached $1.57 billion, establishing a strong initial user and capital base.

Source：https://dune.com/zero_labs/berachain-pree-deposit-overview

2. Tri-Token Mechanism: Balancing Security and Liquidity

To further separate roles and balance incentives, Berachain employs a three-token model:

• BERA: The primary gas token used for transaction fees, staking, and ecosystem incentives. Similar to ETH on Ethereum or BNB on BNB Chain, BERA serves as the primary token for network security and transaction processing. Validators must stake BERA to participate in network operations and earn block rewards.
• BGT: The governance and incentive token used for on-chain voting, proposal governance, and reward distribution. Users earn BGT by providing liquidity to the ecosystem, and governance power is directly proportional to the amount of BGT held. BGT can be converted 1:1 into BERA, but not vice versa — meaning BGT cannot be bought or sold but must be earned through liquidity contributions, effectively functioning as the “voting power + reward points” of the ecosystem.
• HONEY: Berachain’s native stablecoin, pegged 1:1 to the US dollar. Users can mint HONEY by collateralizing other assets on the Berachain platform. As a stable medium of exchange, HONEY enhances usability and facilitates seamless transactions within decentralized applications.

Advantages of this tri-token model include:

• Optimizing security and liquidity: BERA staking ensures network security, while BGT incentives encourage liquidity provision, preventing liquidity shortages common in traditional PoS systems.
• Fair governance distribution: The non-transferable nature of BGT ensures that governance power remains in the hands of contributors rather than speculators, leading to more efficient decision-making.
• Enhanced system stability: HONEY, as a stablecoin, provides a reliable store of value for on-chain transactions and applications, reducing costs and risks for users.

3. PoL Mechanism: Building a Liquidity-Driven Consensus Model

Traditional blockchains typically use Proof-of-Stake (PoS) or Proof-of-Work (PoW) to secure the network via staking or hash power competition. Berachain, however, pioneers a Proof-of-Liquidity (PoL) consensus mechanism. The core concept behind PoL is “liquidity is security,” which allows the chain’s security and liquidity to grow in tandem, avoiding the typical blockchain issues of being “secure but with no users” or “having users but lacking security.” The PoL mechanism works as follows:

• Validators: To become a validator, an entity must stake at least 250,000 BERA. The more BERA staked, the higher the probability of being selected to propose a block (akin to a weighted lottery). Validators earn both fixed rewards (BGT) and variable rewards, with variable rewards based on the BGT votes they receive from users.
• Users: Users deposit liquidity into Berachain applications and receive LP tokens, which they then deposit into an official reward pool. Users earn BGT daily, proportional to their liquidity contribution.
• Voting: Users delegate their earned BGT to validators, increasing their Boost value, which in turn allows validators to earn more BGT rewards when producing blocks. To attract more BGT delegations, validators share a portion of their rewards with users, creating a self-reinforcing economic loop.

In essence, the design logic is: Validators who want to maximize earnings need to attract user BGT votes; users vote for validators who offer them the best returns; Validators share rewards with users and ecosystem applications, creating a mutually beneficial incentive structure.The system sustains itself by ensuring that liquidity provision directly contributes to both network security and economic incentives.

III. Overview of High-Potential Projects in the Berachain Ecosystem

Although Berachain’s ecosystem is still in its early stages with only a few launched projects, its substantial asset scale and strong user base provide a solid foundation for future growth. Below is an analysis of the leading projects ranked by TVL within the Berachain ecosystem.

Source：https://defillama.com/chain/Berachain

1. Infrared Finance — Infrared Finance serves as Berachain’s core liquidity and staking infrastructure, leveraging the Proof of Liquidity (PoL) mechanism to introduce iBGT (a liquid form of BGT) and iBERA, offering users efficient liquidity staking and yield optimization. By staking various liquid assets, users can engage in governance while earning high rewards.Currently managing over $1.8 billion in TVL, Infrared plays a crucial role in value capture within the ecosystem. As the mainnet matures and the ecosystem expands, Infrared is expected to unlock further growth potential through new product innovations and cross-protocol incentives.

2.Kodiak — Kodiak functions as Berachain’s native liquidity hub, utilizing its “Island” mechanism to facilitate concentrated liquidity management, which reduces risk while enhancing capital efficiency. By collaborating with Infrared and Boyco, Kodiak successfully attracted substantial liquidity from the early stages of Berachain’s mainnet launch. It currently manages $1.0 billion in assets, and its non-transferable governance token, xKDK, is expected to unlock post-mainnet launch to support community governance. As a key trading and liquidity provider, Kodiak’s cross-project incentives and liquidity solutions position it for continued user adoption and growth.

3.Dolomite — Dolomite is an emerging lending and leveraged trading platform on Berachain. By integrating traditional lending protocol structures with PoL mechanisms, it provides users with diverse financial services. Dolomite’s participation in ecosystem incentives has already garnered market attention, achieving $860 million in TVL. With mainnet expansion and a growing user base, Dolomite plans to launch a governance or incentive token to attract more lending and leveraged trading activity, further unlocking its growth potential.

4.BEX — BEX is Berachain’s flagship decentralized exchange (DEX), known for its low slippage and high liquidity, making it a key trading gateway within the ecosystem. Recent data shows a steady increase in trading volume, and its deep liquidity pools contribute approximately $860 million to TVL. Future developments may include the introduction of a native incentive token and integration with core ecosystem products like Infrared, further strengthening Berachain’s trading infrastructure.

5.Concrete — Concrete specializes in efficient lending and liquidity optimization, maintaining stable TVL performance while minimizing liquidity losses. Currently managing $760 million in assets, Concrete collaborates closely with Kodiak and Infrared to create a complementary and efficient DeFi ecosystem within Berachain.

6.Veda — Veda is a new asset management and lending service on Berachain, backed by Ether.fi’s technology. It focuses on multi-asset integration and leveraged trading, with a current TVL of $600 million. By introducing governance tokens and multi-chain interoperability, Veda aims to capitalize on cross-asset management demand, driving sustained growth and ecosystem expansion.

7.Beraborrow — Beraborrow is Berachain’s first CDP (Collateralized Debt Position) lending protocol, allowing users to stake multiple assets to borrow NECT stablecoins. Its Continuous Protocol Incentive (CPI) mechanism ensures long-term liquidity incentives, rewarding ongoing participation rather than one-time deposits. With TVL surpassing $400 million, NECT has already become the second-largest stablecoin in the Berachain ecosystem.

IV. Opportunities and Challenges for the Berachain Ecosystem

Opportunities

• First-mover advantage from technological innovation: Berachain’s PoL mechanism, tri-token model, and incentivized pre-deposit vaults provide a new approach to on-chain security and liquidity. Compared to traditional PoS blockchains, its “liquidity as security” concept enhances capital efficiency, attracting high-quality projects across DeFi, NFTs, and GameFi, establishing a strong early-stage advantage.
• Cross-chain collaboration and interoperability: Berachain is actively developing cross-chain bridges and multi-chain liquidity pools, partnering with Ethereum, Solana, and other major L1 networks. This interoperability improves user experience and attracts additional liquidity and capital inflows.
• Strong community and developer support: With an open and transparent development roadmap and innovative incentive mechanisms, Berachain has attracted a rapidly growing developer community. During the testnet, the number of unique addresses and daily active users grew exponentially, demonstrating strong network effects that will support further ecosystem expansion post-mainnet launch.
• Capital backing and strategic partnerships: Berachain has secured investments from major firms like Polychain Capital, OKX Ventures, and Framework Ventures and formed strategic collaborations with Stakestone, Ethena, Lombard, and other top-tier protocols. These partnerships provide essential funding and resource support to accelerate ecosystem development and incentive program expansion.

Challenges

• TVL gap with mature chains: Despite reaching $3.4 billion in TVL as of March 2025, Berachain still lags behind established networks like Ethereum and Solana. Increasing DeFi protocol adoption and user participation will be critical for future growth.
• Technical and security risks: As a new consensus model, the long-term security and stability of the PoL mechanism and tri-token system remain untested. Potential technical vulnerabilities, liquidity incentives, and cross-chain risks require continuous refinement and monitoring.
• Market competition and user education: Competing against Ethereum, Solana, and BNB Chain, Berachain must invest heavily in developer tools, community governance, and user onboarding. Clear education and transparent communication are essential to building trust and preventing market uncertainty (FUD).
• Token inflation and sell-off pressure: Early private investors and incentive-driven token unlocks may introduce market sell pressure. Balancing token distribution with sustainable circulation will be a key challenge for long-term ecosystem stability.

V. Outlook on Berachain’s Ecosystem Potential and Conclusion

After continual exploration and innovation, Berachain’s future is full of opportunities but also faces many challenges. The following is an outlook on a few major directions for its future development:

• Ecosystem diversity and application expansion: Berachain will continue to attract high-quality applications in DeFi, NFT, GameFi and other domains, driving diversified growth of its ecosystem. By further refining its incentivized pre-deposit vault programs and cross-chain collaboration mechanisms, Berachain is expected to overcome short-term fragmented liquidity, achieving efficient capital aggregation and long-term retention.
• Integration with capital markets and strategic cooperation: Berachain will deepen partnerships with leading blockchain projects and traditional financial institutions to build a cross-chain liquidity network and enhance its market competitiveness. Such strategic collaborations can bring more TVL and users to the ecosystem, while also boosting Berachain’s recognition in global financial markets and promoting long-term, stable value growth of its tokens.
• Economic model optimization and incentive balance: To mitigate inflation and selling pressure, Berachain may introduce new mechanisms like iBGT liquid vouchers, refining long-term incentive structures to maintain economic stability.
• Community building and expansion: A transparent governance process and active community engagement will be key to sustaining adoption. Increasing user education and institutional participation will further strengthen the ecosystem.

Conclusion

With its innovative PoL mechanism, tri-token system, and incentivized pre-deposit vaults, Berachain is redefining the relationship between blockchain security and liquidity. Although TVL and ecosystem maturity still lag behind Ethereum and Solana, Berachain’s potential in capital efficiency, incentive structures, and ecosystem diversity is undeniable. As its whitepaper states: “Berachain is not just another EVM chain, it is a new frontier for economic collaboration.”

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