Purpose: Increase long-term sustainability, improve efficiency of emissions spend, reduce unnecessary inflation, and bring Berachain’s inflation in line with other leading L1’s.
Note:
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This proposal does not modify reward mechanics, vault distribution logic, validator boosting, or any Proof-of-Liquidity (PoL) functional components.
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The team is concurrently evaluating longer-term improvements to PoL with the goal of creating sustainable protocol level revenue streams and enabling 1 BGT to return 1 BGT+ in value to the protocol and token holders over time.
Motivation
Berachain currently targets ~10% annual BGT inflation, with realized inflation year-to-date averaging ~8%. High inflation was appropriate as we bootstrapped the network’s validator set and early application ecosystem, but as the ecosystem matures and a new macroeconomic environment sets in, the justification for maintaining double-digit inflation has materially decreased.
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Competing L1s have broadly trended toward lower inflation reflecting market demands and competitive landscape
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Reducing inflation now positions Berachain as a long-term oriented, disciplined network that maintains strong incentives without overpaying for participation.
Additionally, the BGT Foundation’s Guardians and the team at Bera Labs have been evaluating the spend efficiency and economic value created by a number of the PoL reward vaults. From preliminary analysis, a number of vaults are not generating meaningful economic (or softer) value. As such, the amount of BGT emissions required to help sustain existing productive liquidity and activity on the network is likely significantly lower than current emissions.
To better position Berachain, we propose to reduce the BGT inflation rate to ~5% to align Berachain with the broader L1 market while retaining the current structure of PoL. Over the course of 2026 and 2027, we would look to further reduce inflation to be closer to Ethereum’s pace.
BGT Inflation Context
Today, Berachain mints BGT at a target rate of ~10% annually. These emissions represent the chain’s block-reward budget and:
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Validators receive BGT block rewards;
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Validators then direct a portion of those rewards to Rewards Vaults, which pay incentives to influence validator allocations; and,
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Protocols supply incentives to influence those allocations.
We are not proposing any changes to how BGT emissions are routed or distributed, only how much BGT is issued annually.
Implementation
Inflation is managed through two different mechanisms, the base rate fees and BGT emissions with a target rate of 10%. For this proposal, we are recommending lowering the target to 5%. The breakdown of how we would achieve this would be:
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Base Rate: Unchanged. Currently at 0.4 BGT and remains.
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Reward Rate: Cut to 0.65 BGT
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BGT Emissions Formula: Cut to be at a target of 5%, inclusive of the base rate.
Where:
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B is the Base Rate, equal to 0.4
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R is the Reward Rate, cut to 0.65 (currently 1.2)
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m is the minimum boosted reward rate, set to 0
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a is the boost multiplier, equal to 3.5
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b is the convexity parameter, equal to 0.4
Stakeholder Analysis:
Below is a breakdown of how each stakeholder is affected by the change.
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BGT Holders & Delegates : Yields will be lower. The number of BGT in existence is the same, while the gross number of new incentives being emitted in the marketplace is lower.
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BERA Holders : BERA should increase in relative scarcity.
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BERA Stakers : Same as BGT holders however, lowering the amount of BGT being emitted will lower the amount of incentives captured by PoL v2 and lower overall staking yields.
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Validators : The base rate will not change however, incentives will decrease, lowering the amount of total incentives.
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dApps : No change, incentives bid will still get filled by validators though the total amount of emissions that dApps share will be lower (denominated in units of BGT).
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LPs : Yields will be lower.
Competitive Landscape
Several major L1 ecosystems have already moved or have proposals to move toward single digit or declining inflation models.
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Solana: ~4.18% built in, decreasing inflation model with proposals to accelerate reductions. Also has fee burning.
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Aptos SFA model (inflationary rewards with fee burning) : ~6.5% in Q2’25 & gradually reducing to 5.25% over 7 months (AIP-119)
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Monad (block rewards with fee burning): 2% inflation
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Plasma: Validator rewards begin at 5% annual inflation, decreasing by 0.5% per year until reaching a long-term baseline of 3%.
Conclusion
Reducing BGT inflation from ~8–10% to ~5% strengthens Berachain’s long-term economic foundations by:
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Improving sustainability
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Increasing emissions efficiency
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Reducing unnecessary dilution
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Aligning with competitive L1 monetary policy trends
This proposal intentionally preserves all existing PoL mechanics while adjusting total issuance to a level that better reflects the network’s present maturity and market expectations.
We welcome discussion and are happy to answer any questions from the community.