Berachain Foundation Unveils ‘Proof of Liquidity (PoL)’ and Overhauls Ecosystem Reward System and Governance Structure
The Berachain Foundation has introduced its innovative "Proof of Liquidity (PoL)" mechanism while announcing a comprehensive restructuring of its ecosystem’s reward system and governance framework.
The foundation outlined key changes, including the transition to Governance Phase 1, the activation of new incentive mechanisms, and the introduction of newly opened reward "Vaults." Under this revamped structure, BGT token holders will gain the ability to directly influence the flow of incentives and oversee the distribution of rewards to users, applications, and validators.
The first batch of reward Vaults submitted for consideration has undergone evaluation and received approval. Initial distributions will be limited to decentralized exchanges (DEXs).
The Berachain ecosystem currently maintains an annual inflation rate of approximately 10% through BGT issuance, with an average block generation time of about 2 seconds.
Rewards are divided into two categories. Fixed block rewards, set at 0.5 BGT per block, are allocated to validators. The remaining 1.5 to 4.5 BGT constitutes variable rewards, which are assigned to reward Vaults. These variable rewards are distributed based on the amount of BGT delegated to validators, subsequently funneled into the reward Vaults according to predetermined ratios.
As of now, the daily average issuance of BGT stands at approximately 150,000 tokens. Of this total, roughly 15% is distributed to validators as fixed rewards, while the remaining 85% is channeled through the reward Vaults.
