Berachain: Where Memes and Innovation Collide

Key Takeaways

• Berachain is an Ethereum Virtual Machine (EVM)-compatible Layer 1 blockchain that introduces a novel Proof of Liquidity (PoL) consensus mechanism, requiring users to provide liquidity rather than simply staking tokens.
• The ecosystem operates on a tri-token model featuring BERA (gas token), BGT (governance token), and HONEY (stablecoin), which could be a key strength or a barrier to adoption.
• Berachain differentiates itself with a strong meme-driven identity, leveraging crypto culture to build a unique and engaged community, but it remains to be seen whether this will translate into long-term developer and investor confidence.

What is Berachain?

Berachain is one of the newly launched Layer 1 smart contract blockchains. Following in the footsteps of Sui, Aptos, Sei, and other next-generation blockchains, it aims to deliver fast transactions and low fees, addressing the demand for scalable and cost-efficient blockchains.

Berachain Foundation announcing the mainnet release in February 2025

Unlike traditional Layer 1 blockchains, Berachain is built to be fully compatible with the Ethereum Virtual Machine (EVM), allowing developers to seamlessly migrate and deploy Ethereum-based smart contracts and decentralised applications (dapps) without modification. This ensures that existing Ethereum tools, such as MetaMask and Solidity, can be used natively on Berachain, making adoption easier for developers.

What Makes Berachain Different

Consensus Mechanism

Unlike most other Layer 1 blockchains that use Proof of Work (PoW) or Proof of Stake (PoS) mechanisms, Berachain introduces a novel consensus model called Proof of Liquidity (PoL).

PoL integrates liquidity provision directly into the security and governance of the network. Unlike simply staking a single asset to earn a yield, as seen with PoS on Ethereum, Berachain requires users to provide two tokens—BERA paired with another token such as HONEY, the network's stablecoin.

These assets are added to a liquidity pool on Berachain’s native decentralised exchange (DEX), where participants earn trading fees and receive Berachain Governance Token (BGT) as a reward. BGT is non-transferable and serves as the governance token, granting holders voting rights over network decisions and protocol upgrades.

How providing liquidity and earning rewards works on Berachain

Tri-Token System

Berachain’s tri-token system plays a crucial role in its ecosystem:

• BERA functions as the native gas token used to pay for transaction fees on the network. This is what other blockchains are more familiar with as the asset used to pay for transactions.
• Berachain Governance Token (BGT) is a non-transferable token earned by providing liquidity, granting governance rights to active participants.
• HONEY is a fully collateralised stablecoin pegged to the U.S. dollar, facilitating seamless transactions within the ecosystem.

This three-token model is a point of difference for Berachain that comes with its own tradeoffs. On one hand, it separates the transactional token (BERA) from the DAO governance token (BGT), which historically has struggled to maintain value on other blockchains. On the other hand, the added complexity of an extra token could create confusion, potentially discouraging new users who are unfamiliar with how it works.

The Meme Layer 1

Berachain stands out from other Layer 1 blockchains with its meme-driven branding centred around bears. Unlike Ethereum, Solana, or other serious branding efforts, Berachain fully embraces crypto culture by weaving bear-themed memes into its ecosystem. This branding plays on the market’s bear and bull cycles, making it instantly recognisable and fostering a strong, engaged community.

But, will the meme culture resonate with developers and investors for long-term sustainable growth? While a strong community can drive early adoption, Berachain will need to prove that its technology and ecosystem have staying power beyond the meme.

Examples of the Bears that are part of the meme culture of Berachain

The Competition Is Fierce

Berachain enters a highly competitive market dominated by incumbents such as Ethereum and Solana. There are also several emerging Layer 1s such as Sui, Sei, Aptos, Monad, and others. These new chains are competing aggressively to carve out market share by offering improved scalability and lower fees. Despite this competitive landscape, Berachain’s PoL model provides a compelling value proposition that is separate from the competition.

Conclusion

Berachain is entering a highly competitive Layer 1 landscape, aiming to set itself apart with Proof of Liquidity, a tri-token system, and a meme-driven identity. While these factors create a unique position in the market, they also introduce challenges. The network must demonstrate clear utility beyond its branding, ensuring developers, liquidity providers, and users find long-term value in its ecosystem.