Give you the most comprehensive overview of POL and its potential impact on ecosystems, especially BERA prices. The content covers basic mechanisms, inflation emission plans, token economic models, and key strategies (or tips) to absorb inflation pressure. This article comes from the article written by DeFi_Cheetah, former Binance researcher, compiled, and written by zhouzhou and BlockBeats. (Abstract: Alpha Nuggets" Ramen Finance launches a dual-mode Launchpad, which can ignite the Berachain Berachain new trend? ) (Background supplement: Detailed explanation of Berachain's three-token model mechanism, what are the characteristics of Proof of Liquidity? ) Berachain's liquidity proof mechanism aims to solve the problem of mismatch in the consensus mechanism incentives in traditional proof of stake (PoS) blockchain. Under the PoS mechanism, users need to lock assets to obtain pledge rewards, but this leads to incentive mismatch, because DeFi projects also require assets and liquidity, which ultimately leads to them directly competing with the PoS mechanism. PoL has redesigned incentives to enable it to improve network security and decentralization while promoting DeFi activities, rather than relying solely on asset locking. Basic mechanism There are two core native assets in the Berachain ecosystem: BERA and BGT: BERA is a Gas fee and a pledged token, which is mainly used for the selection of verifiers (see below for details). BGT is a governance token (not transferable and can be converted to BERA at 1:1). Furthermore, it determines the economic incentives and emissions that can be allocated to the whitelisted DApp reward vault. BGT can be redeemed (or destroyed) as BERA at 1:1, but more importantly, BERA cannot be converted back to BGT. Note: The more BGTs a validator holds, the higher the reward they receive whenever they make blocks. But whether they can be selected to generate blocks and thus receive rewards depends entirely on the number of BERAs they pledge. Unlike traditional PoS, under the traditional PoS mechanism, verifiers directly receive rewards from the blockchain through verification transactions, and users entrusted to verifiers also receive corresponding proportions of rewards based on the staking amount. And at Berachain, the verifiers get BGT (the Distributor smart contract is minted and distributed by the BlockRewardController contract). But they must immediately assign most of the BGT to the whitelisted DApp’s Reward Vaults. The protocols then compete for the BGT of these validators through bribery (usually the native tokens of the protocol), and the incentive rate of bribery is correlated with the emissions of 1BGT. The more attractive the bribe is, the more likely the validator will be to direct the BGT to the DApp Reward Vault that provides the highest returns. For example, users can provide liquidity in some liquidity pools of native DEXs to earn LP transaction fees. Then, by depositing the LP tokens into the DEX reward vault of a specific trading pair, users can receive additional BGT bonuses on the basis of LP fees. After receiving the BGT reward, the user can choose to delegate the BGT to the verifier, or stake BERA. And the validator's BGT emissions will increase as the number of entrusted BGTs increases. As POL is now online, the number of whitelisted vaults has increased significantly. Regarding BGT delegation, the validator can actively or passively decide to which reward vault to direct the release of the BGT to, depending on the amount of bribe provided by the dapp. Users as principals can choose the principal object based on the validator's strategy and the bribes they expect to earn for the principal. Therefore, validators who can bring the most benefits to the principal are more likely to receive more BGT commissions. Regarding BERA staking, the staker will contribute to the self-bond of the verifier, so he can obtain a portion of the BGT and BERA earned by the verifier. Block production vs. BGT release Verifier selection criteria: Only the top 69 verifiers in the top 69 BERA stake are eligible for block production (minimum 250kBERA, maximum 10MBERA), and the probability of blocking is proportional to the amount of BERA pledged, but this will not affect the BGT release of the reward vault. BGT release for each block: This part is crucial because the locking of BERA depends on how the formula is designed. The release of BGT consists of two parts: Base Emission and Reward Vault Emission. Basic release: Fixed amount (currently 0.5BGT), paid directly to the validator who gave the block. Release of reward vault: This part is highly dependent on "boost", that is, the proportion of the BGT delegation obtained by a certain verifier to the total BGT delegations on the entire network. The citations a and b affect the extent to which "increase" affects the release of the final reward vault. In other words, the larger a and b, the more significant the impact of "increase" on the release of the reward vault. The amount of release of the reward vault is proportional to the weight in the validator's reward allocation formula. In other words, the more BERA stakes, the higher the probability that the verifier will be selected to produce blocks; the more BGTs are entrustated from BlockRewardController smart contracts, and can be directed to more reward treasuries.This allows verifiers to obtain more incentives from each protocol (in various token forms) through the reward vault. The top 69 validators with the most stakes in BERA are eligible to produce blocks. They decide how to allocate the BGT to release it to the reward vault and obtain some incentive tokens in the commission ratio, and the remaining part is allocated to the principal at the corresponding reward ratio for each 1 BGT. The BGT in the reward vault is allocated to users who provide liquidity to the relevant liquidity pool. After a liquidity provider obtains a non-transferable BGT, it can: As a principal, delegate the BGT to the verifier to earn the bribery benefits provided by the agreement; irreversible exchange of BERA to obtain instant profits. In the Berapalooza 2 event, the first-day RFRV submissions attracted more than $500,000 in bribe funds. If this momentum continues and doubles before PoL goes online, the amount of bribes per week could reach $1 million, forming a massive incentive flow within the Berachain ecosystem. Meanwhile, Berachain releases 54.52MBGT per year, about 1.05 million BGT per week. Since 1BGT can burn and exchange for 1BERA, the price of BERA at that time was 8.43, it means that the incentive value allocated by Berachain is as high as 8.8M per year. But it is worth noting that only 16% of BGT releases go directly to validators, with the remaining 7.4M entering the reward vault every week. therefore
