Original post from SmokeyTheBera: General (non-BEX) RFRV Reward Vault Request for Kodiak BERA-iBGT Island Pool
Context
Berachain is founded on a single belief - great chains are defined by great applications. Proof of Liquidity (PoL) was designed to reflect that same belief. Berachain’s emissions go towards accelerating its applications and rewarding their users.
As the ecosystem scales, PoL is evolving with it: reinforcing aligned behavior, driving value directly to BERA, and deepening support for the protocols that make Berachain the most application-centric L1 in existence.
Unlike traditional PoS chains where staking serves as a de-facto sink for the staking token, PoL routes ~90% of block rewards toward the application layer. This model has fueled deep liquidity and activity on the chain, but it has left BERA staking with relatively low yield, therefore limiting the standard and secure source of demand for an L1 token. Meanwhile, BGT and its derivatives have become the default vehicle for earning yield, commanding attention and capital across the ecosystem as a key money lego.
Despite being the native asset of the network and listed across major exchanges, BERA’s utility is currently underleveraged. PoL v2 unlocks a direct, protocol-native yield path for BERA for CEX and on-chain users alike, with no need for third-party dApps, wrappers, or understanding of more complex tokenomics.
As such, the goals of PoL v2 are as follows:
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Increase intrinsic demand and utility for BERA. Enable a simple, protocol-layer means of earning yield on BERA for holders on centralized and decentralized venues alike without interaction with 3rd party dApps.
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Avoid short-term destabilization of the ecosystem built around BGT and BGT derivatives as yield-bearing assets.
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Optimize for a rapidly implementable solution, with simple UX and minimal disruption to existing codebases.
This is a net-new unlock - an additive step forward that strengthens Berachain’s core incentive design and brings more value to its base asset.
Proposal: BERA Yield Module via PoL
We propose redirecting 33% of current PoL incentives which are currently issued to BGT boosters into a new rewards module for liquid BERA (and in the near future upon redemptions being implemented for each protocol, BERA LSTs as well). This creates a native, protocol-level yield source for BERA holders, driving demand and utility without displacing existing stakeholders.
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BERA stakers in the new module receive rewards from Proof of Liquidity. BERA incentives are passed along directly, and non-BERA emissions are converted into BERA via buybacks
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7-day unbonding period for staked BERA encourages alignment and discourages short-term farming behavior (similar to tokens such as HYPE, ENA, or KAITO. During the unstaking period, the unstaked BERA amount will not receive further rewards).
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Support for LST staking, enabling Bera stakers to earn from validator staking rewards and PoL yields in parallel, while promoting network security.
Proposed Implementation Timeline
Post live on Forum: July 14th, 2025
Community Feedback: July 14th - July 20th, 2025
Guardians Vote: July 21st, 2025
Mainnet Launch (if vote is successful): July 21, 2025
This implementation is technically simple, minimally disruptive, and ready for testnet in days and mainnet deployment within a week. Locked/private tokens are ineligible to be deposited in this module and may not earn yield in this manner.
Stakeholder Analysis
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Protocols and Builders: Zero disruption. Optional upside via BERA yield module integrations or treasury strategies.
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BERA Holders (CEX/onchain): The first native protocol yield source. One-click utility and best in class yield amongst L1 tokens.
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BGT Holders: BGT continues to play its core role in validator boosting and app incentives. Nothing changes operationally, though a portion of emissions is redirected toward the chain’s native asset, BERA.
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dApps and Liquidity Providers: No changes. Incentives continue uninterrupted and LP rewards remain BGT-denominated. Apps still receive a “money multiplier” on their incentive spend (ie. spend $1 in incentives to receive $1.20 in Reward Vault emissions)
Why this solution?
The crypto market is rapidly maturing, and digital assets need to mature in parallel. As we find ourselves facing an increasingly fundamentals-driven market, it becomes equally important to build a clear narrative around token value accrual.
Berachain already models intuitively to a traditional growth-stage investor - PoL invests the network’s “resources” (block rewards) into B2B2C growth vectors (applications and their users) which expand the network’s total addressable market (TAM) and associated userbase.
A key part of maturing is making things easy for people to understand.
The equation here is simple. Stake your BERA, and watch PoL convert incentives from teams building across the chain into more BERA for you.
Through conversations with institutional capital providers, centralized exchanges, ecosystem builders, BERA holders and more, we’ve seen that a simple, protocol-native way to leverage PoL to earn yield on BERA would be a major unlock. Not only does it create more demand for BERA, but it opens the door to more advanced integrations over time, including using LST staking to increase network security over time.
Finally, it doesn’t inhibit PoL’s ability to scale - in fact, it simply means that more diverse rewards vaults and incentive structures can drive value directly to BERA over time.
We believe the simplicity, flexibility, and near-term deliverability of this module make it the right move at the right time.
Looking Backwards
A number of approaches were evaluated while working towards PoL v2, in line with the goals described above. While none of them were ultimately seen as the most feasible path forward, each has its own merits which may warrant further exploration and input from the community as PoL iterates towards a final form.
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rBGT (like rEUL) – Enabling a small percentage of BGT (e.g. 33%) to be immediately claimed, with the remainder claimable over a few months. Forces PoL participants to be more long-term aligned, at the expense of PoL incentives and TVL carrying capacity, especially for volatile LPs. Ultimately erred against due to complexity, and the aforementioned tradeoffs.
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BERA for Validator Boosting – Most similar to the suggested PoL v2 implementation from a yield perspective, with more technical overhead requiring a hard fork for modifications for the PoL smart contract, increased validator overhead / complexity, and rework of incentive distribution backend services.
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Conversion of BERA to BGT at premium – Reduces the ability for BGT and its derivatives to serve as a supply controlled “black hole” for inflation, and introduces second order incentives for market participants to decrease the BGT premium etc, along with expected volatility and oracle risk on conversation rates.
Looking Forward
PoL v2 is a foundational piece in the long-term roadmap to increase value capture by BERA. We’re actively exploring future approaches that can further align the ecosystem without compromising simplicity while continuing to drive value to BERA holders:
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BERA Bonding for RV Access - Introduce protocol bonding as a more objective and scalable gateway to reward vaults, creating demand for BERA, and minimizing complexity introduced through the governance process. Potentially combined with a minimum BGT balance requirement.
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Fixed Emissions to Core dApps - Direct PoL incentives to high-volume or revenue-generating pairs (e.g. DEXes, Bend) with profit-share logic going towards BERA buybacks
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Standardized Incentive Tokens - Simplify the validator and user experience by migrating to a curated list of high-liquidity major assets for PoL incentives.
These ideas are being developed in tandem with protocols and contributors across the ecosystem and will roll out as the network matures.
In Summary
PoL v2 marks a meaningful evolution of Berachain’s incentive architecture. It creates direct, flexible yield for BERA holders, maintains a strong ecosystem around BGT, and sets the stage for future protocol-layer value capture mechanisms.
We’re excited to take this clear step forward - delivering immediate utility for stakeholders while strengthening BERA as the economic engine of the Berachain network.
Let’s get to work.