Big news for the Berachain network! This bear-themed layer-1 blockchain just hit a major milestone, launching rewards for its unique “proof of liquidity” system this Monday. And it looks like the market is loving it. Just a day after going live, the BERA token has jumped 14%, according to CoinGecko, even breaking into the top 100 cryptocurrencies by market cap.

So, what exactly is “proof of liquidity”? Think of it as Berachain’s spin on the proof-of-stake model that Ethereum uses. It’s built around two main tokens: BERA, which handles gas fees and keeps the network secure, and BGT, the governance and rewards token. Here’s how it works: validators stake BERA. This allows them to propose new blocks and, in turn, earn rewards in BGT. These BGT rewards then flow into special “reward vaults.”

Now, here’s where it gets interesting: validators are the ones who supply the liquidity to these reward vaults. This liquidity is then used to reward regular users who stake their assets, like BERA, and earn BGT. As a thank you for providing this liquidity, validators get a “receipt token.” This token can also be staked in the reward vaults, creating a smart system where everyone is incentivized to secure the network through staking. This exciting feature went live on Monday, kicking off with 37 reward vaults and starting the distribution of BGT throughout the Berachain ecosystem.

And what about BGT, the governance token? Well, it gives you a voice! BGT holders can use their tokens to vote on important proposals that shape the future of Berachain.

Keep an eye out later this week! A second wave of requests to get whitelisted for reward vaults is coming up for a vote. The network has stated that the first batch was chosen based on factors like “economic value, security, and how well they fit into the Berachain ecosystem.”

The market’s positive reaction is clear as day. The BERA token not only jumped 14% on the launch day but also climbed 30% over the week, according to CoinGecko. Early this morning, it even hit a high of $8.03. Currently, BERA is trading at $7.89 and still holds its position as the 100th largest cryptocurrency, boasting a market cap of $858 million.

“This is a huge step forward in Berachain’s governance journey,” Homme Bera, the pseudonymous founder of Berachain, shared in a recent blog post. He explained it as moving “[from a limited launch within native BEX pools to a more open, application-first ecosystem where projects can now drive sustainable growth through [proof of liquidity].”

Berachain initially launched its mainnet in February, making headlines with a massive $1.17 billion airdrop of BERA tokens to early supporters. However, this initial launch was somewhat limited, focusing mainly on its Berchain native decentralized exchange (also known as BEX) and its liquidity pools for asset deposits.

This launch of the first set of reward vaults is a significant step forward, marking what the network is calling the official rollout of its proof of liquidity mechanism.

“This is just the start,” Homme Bera emphasized, mentioning that more reward vaults are on the horizon after the second batch review this week. “With [proof of liquidity] now live and governance expanding, decentralized applications (dapps) have a straightforward way to attract both liquidity and users, while BGT holders ultimately decide where the incentives are directed.”

Edited by Stacy Elliott.