Original post from Tio: Protocol Update: New Emissions Routing - Announcements - Berachain General
One of Berachain’s most unique qualities is the ability to direct network emissions towards protocol growth, in contrast to most L1s which spend their block rewards on network security.
Berachain also owns certain applications on the network which are capable of generating revenue for the protocol while providing key services to users on the chain.
Currently, PoL emissions flow entirely through validator cutting boards.
Going forward, a portion of emissions will be routed at the protocol level before reaching validator cutting boards through dedicated emission streams. These emissions will be directed to chain owned applications, with the potential to expand to other 3rd party applications. In order for dedicated emission streams to extend to a 3rd party application, there would need to be a clear path towards generating $1+ in returns for every $1 worth of BGT received. All applications receiving emissions, dedicated or otherwise, will materially contribute to network activity and long term protocol health in accordance with the Rewards Vault evaluation framework previously outlined.
The remaining emissions will continue to flow through the standard incentive marketplace.
Why This Matters
While validator-driven allocation is effective at surfacing market demand, some network-critical initiatives require consistent, predictable emissions to maintain and improve core chain functionality.
And put simply, there is no group with as much incentive to create value and revenue drivers for the BERA token as the Foundation and its core suite of applications.
This update allows Berachain to:
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Support network-critical work streams with stable incentives
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Reduce emission volatility where predictability matters
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Preserve market-based allocation for the majority of emissions
It’s important to note that Validator-driven PoL remains the default. This is a targeted refinement, not a replacement.
Initial Emissions Allocation: BEND
The first protocol-level work stream supported through this mechanism will be BEND, Berachain’s native lending platform.
BEND plays a central role in:
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Onboarding desirable collaterals to Berachain
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Facilitating access to stable yield for users
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Generating a healthy, sustainable revenue stream for the protocol
Directing a portion of emissions to BEND ensures it has stable, predictable support while continuing to meet the same effectiveness and usefulness standards applied elsewhere in PoL. In the future, as Berachain’s portfolio of chain-owned applications expands, we expect additional streams to flow towards these apps to drive revenue generation opportunities and value accrual to BERA.
This allocation will be reviewed over time and is not permanent by default. More details will be coming soon.
Edit: Additional context
A couple of folks reached out and asked for greater clarification around the above guidelines. In short, dedicated emissions streams will be directed towards either:
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Key chain owned apps or primitives (eg. Bend)
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Apps which may be revenue positive (for the chain) over time
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For additional clarity, “$1+ in returns” means an application can sustainably pay more than $1 of incentives for every $1 of BGT received, measured over time. This threshold is a target, not an immediately enforced requirement. Specific timeframes and guidelines will be determined as aforementioned pilot programs are rolled out
The most important re-framing here is that as opposed to immediately receiving $0.7 in incentives for $1 of BGT emitted (current status quo of PoL), the chain would look to earn $1+ in revenue shares for $1 of BGT emitted over a longer time frame. The goal of this exercise is to transform PoL from a loss leader into a revenue generator at the chain level.
Chain owned applications will strive to adhere to the same standards as third party apps, though we do not expect either group of apps to be immediately profitable.