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  • Two Token Model
  • Ecosystem Alignment 🤝​
  1. Technicals

What is Proof-of-Liquidity?

Proof-of-Liquidity (PoL) is a novel economic mechanism that uses network incentives to align the interests of ecosystem participants and bolster both application-layer and chain security.

PreviousSuperBros NFTNextOne-Click Trading

Last updated 2 months ago

Two Token Model

Berachain's consensus borrows from the Proof-of-Stake (PoS) model and contains two key components:

  1. - Validators secure the chain by staking the native gas token

  2. - A soulbound governance token distributed by validators for proposing new blocks, which is ultimately rewarded to users who provide ecosystem liquidity (see )

A validator's $BGT emissions increase with the amount of $BGT delegated to them. Protocol-provided are received for these emissions, and validators pass these to their delegators after collecting a commission.

This model creates meaningful economic alignment between previously isolated groups. Validators who return the maximum value to their $BGT delegators are likely to receive more delegations.

Significantly, Proof-of-Liquidity separates the token responsible for gas and security from the token used to govern chain rewards and economic incentives.

By integrating Berachain's native network rewards among all ecosystem participants, PoL creates alignment between:

  • Validators: Need $BGT delegation to maximize their block rewards and must efficiently direct emissions to reward vaults to earn Incentives and attract more boost.

  • Protocols: Compete for $BGT emissions by offering attractive Incentive rates in their reward vaults

  • Users: Earn $BGT by providing liquidity, then delegate to validators who maximize returns

Separation of Concerns

Ecosystem Alignment 🤝

Read More:

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https://docs.berachain.com/learn/pol/
$BERA
$BGT
Reward Vaults
Incentives