PoL v2: Innovative Value Distribution of Berachain

Berachain attempts to address the "mainnet asset dilemma" that public chains have long faced by upgrading its unique Proof of Liquidity (PoL) mechanism. This issue manifests as mainnet tokens, while bearing fuel fees and consensus functions, struggle to directly benefit from the value growth of the ecosystem. The core adjustment in the PoL v2 version is to shift 33% of the application incentives from BGT (governance token) stakers to BERA (mainnet token) stakers.

This seemingly minor change actually represents a significant shift in the mainnet asset value model. While PoL v1.0 successfully drove growth in the total locked value (TVL) of the ecosystem, its benefits primarily flowed to BGT and its derivatives. The v2 version introduces a "dual-channel allocation" model, allowing main coin holders to earn protocol-level rewards without having to engage in complex DeFi strategies, essentially completing the upgrade of BERA from a mere fuel token to a yield-bearing asset.

The mechanism design of PoL v2 embodies several key characteristics:

1. Non-inflationary returns: The new version does not increase token issuance but reallocates existing incentives to allow BERA to obtain chain-level cash flow.

2. Maintain the BGT ecological niche: Retain 67% of the incentives for BGT stakers, which not only preserves the incentive effect of the project but also avoids large-scale withdrawals by governance token holders.

3. Triple positive feedback loop: More BERA staking increases chain security, higher staking rates reduce circulating tokens, and less circulation amplifies the yield of each unit of BERA.

Impact on market participants:

• Retail investors can earn direct and indirect returns by simply staking BERA, significantly lowering the participation threshold.
• Developers can utilize the newly added yield attributes of BERA to design innovative mechanisms, such as automatic buybacks or the development of new financial products.
• Investors may need to reassess the valuation model of Berachain, considering it as an asset with cash flow.

However, this innovation also faces some challenges, including potential gaming behavior in the short term, the complexity of the mechanism that may affect user understanding, and potential regulatory risks.

Berachain's attempt reflects that the competition among public chains is shifting from performance and cost to value distribution efficiency. By directly injecting ecological value into the main token through protocol layer design, PoL v2 demonstrates a new solution aimed at making the mainnet token a direct beneficiary of ecosystem prosperity. If this model is continuously validated, it may influence the development strategies of other public chain projects.