BERA (BERA) tokenomics

Berachain is a Layer-1 blockchain built on the Cosmos SDK that utilizes a novel Proof-of-Liquidity (PoL) consensus mechanism. This system is designed to align network security with liquidity provision, addressing the capital inefficiency often found in traditional Proof-of-Stake (PoS) models where staked assets are locked and unproductive. The ecosystem operates on a tri-token model consisting of BERA (gas), BGT (governance), and HONEY (stablecoin).

Issuance Mechanism

The issuance of Berachain's native tokens is tied to network activity and block production. At the genesis of the mainnet, a fixed supply of BERA was established, while BGT is issued through ongoing inflation.

• BERA Genesis Supply: 500,000,000 BERA tokens were issued at genesis.
• BGT Emissions: BGT is earned as emissions by users who provide liquidity to "whitelisted" pools on native protocols like the Berachain Exchange (BEX).
• Inflation Routing: Validators who produce blocks earn the right to direct BGT inflation. They route these future emissions through a module called x/berachef to specific liquidity pools.
• BERA Creation: BERA can be created by irreversibly burning BGT at a 1:1 ratio. This means BERA's supply can increase as governance participants choose to convert their non-transferable governance power into liquid gas tokens.

Allocation Mechanism

The initial allocation of the 500 million BERA tokens at genesis was distributed across several key stakeholder groups to ensure ecosystem growth and decentralization.

Usage and Incentive Mechanism

Berachain’s incentive structure is built around the Proof-of-Liquidity model, which creates a circular economy between users, validators, and protocols.

Token Utility

• BERA: Functions as the native gas token for transaction fees and is staked to activate validators.
• BGT: A non-transferable, soulbound governance token. It is used to vote on which liquidity pools receive BGT emissions and can be delegated to validators to earn a share of network rewards.
• HONEY: A stablecoin pegged to USDC, used as the primary borrowing asset and collateral within the ecosystem's lending and perpetual protocols.

Incentive Loops

• Proof-of-Liquidity: Unlike traditional PoS where rewards go to pure stakers, Berachain rewards those who contribute to the network's liquidity. This increases capital efficiency as the assets securing the network also provide depth to the DeFi ecosystem.
• Bribe Mechanism: A "bribing" market exists where protocols can incentivize BGT holders to direct emissions to their specific pools. Validators compete for delegators by offering these bribes (additional rewards) on top of standard emissions.
• Validator Rewards: Validators earn three types of income: BGT inflation, a percentage of trading fees from the pools they direct emissions to, and gas fees from block production.

Locking Mechanism

The locking mechanisms in Berachain are primarily focused on the non-transferable nature of the governance token and the requirements for network security.

• BGT Non-Transferability: BGT is "soulbound" and cannot be traded on the open market. It can only be earned through liquidity provision or converted into BERA. This ensures that governance power is earned by active participants rather than simply purchased.
• Staking for Security: BERA is staked to activate validators, providing the initial security layer for the network.
• Delegation: Users delegate BGT to validators to participate in governance. While delegated, the BGT remains locked in the governance process but allows the user to earn rewards and bribes.

Unlocking Time

The unlocking schedule for Berachain is designed to manage the release of tokens to investors and the community over time.

• Mainnet Launch: The mainnet launch was scheduled for early 2025 (specifically February 6, 2025).
• Withdrawal Enablement: For certain ecosystem vaults (such as the uniBTC Berachain Vault), withdrawals are enabled approximately 3 months after the mainnet launch.
• Investor and Contributor Vesting: While specific individual vesting dates for all 500 million genesis tokens are not fully detailed in a single table, the general structure for such Layer-1 projects typically involves a multi-year unlock period (often up to 5 years) to ensure long-term alignment of core contributors and investors.