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@morganlefay.eth
What You Should Know About $BERA ( /berachain )? 🐻⛓ Here are my insights on Berachain, feel free to take a look: 1/ The Three Types of Tokens on Berachain. 2/ The Proof of Liquidity Model of Berachain. 3/ Realities of This Model. 4/ Tokenomics of Berachain. 5/ FUD from the Berachain Team. 6/ Should You Invest in $BERA?
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@morganlefay.eth
1/ The Three Types of Tokens on Berachain - $BERA: This is the transaction fee token on Berachain. Validators stake BERA to secure the network, with a minimum of 200,000 BERA. - $BGT: This is the governance token representing the Proof of Liquidity rewards (explained below). It is non-transferable. - $HONEY: This is the stablecoin of Berachain, backed by assets staked by users.
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@morganlefay.eth
2/ The Proof of Liquidity Model of Berachain The Proof of Liquidity model involves users providing liquidity on various pools (e.g., WBERA, HONEY) in Berachain's DeFi ecosystem, earning $BGT as rewards. $BGT is used for governance and can be swapped 1:1 for $BERA. - Governance here refers to determining the inflation rate of $BGT across different DeFi pools in the future. - Since $BGT is a non-transferable token, users need to swap it for $BERA for trading. However, there are liquid versions of $BGT like iBGT. 💡
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@morganlefay.eth
3/ Realities of the PoL Model Currently, I see only 5 vaults applying $BGT inflation. I am uncertain about how the governance of $BGT inflation will perform if more vaults are added in the future. Additionally, this inflation only applies to Berahub (the home project), with other projects like Kodiak not benefiting. In short, the model is still in testing and a bit textbook-like, not widely implemented across various assets (more pools) and protocols. According to the flywheel theory discussed by KOLs on X, which goes: Increased liquidity → Stronger ecosystem → Increased demand for $BERA, I think it's still difficult to say whether increasing liquidity in a concentrated manner will strengthen the ecosystem.
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@morganlefay.eth
4/ Tokenomics of Berachain 💸 Berachain has quite high inflation, around 10% per year. If the PoL strategy doesn’t boost the ecosystem, the token could be diluted significantly. Another point is that early investors in the latest round of Berachain’s funding are positioned at a fully diluted valuation (FDV) of $1.5 billion. Currently, Berachain is at $3.7 billion FDV, which will unlock in February 2026. In normal market conditions, this may not be a problem, but with the market currently in a downturn, there's a significant risk of a sharp decline. If you look at Solana, OTC deals around $60-$100 from FTX were still followed by a retail panic sell-off, so Berachain could experience a similar situation. It's possible that early investors might have the same position as the funds.
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@morganlefay.eth
5/ FUD from Berachain ⚠️ According to DeFi researcher Ericonomic (on X, February 9, 2025), DevBear (one of the three anonymous founders: Smokey The Bera, Dev Bear, Papa Bear) received around 200,000 BERA from an airdrop. One of his wallets was linked to selling part of this token, exchanging it for WBTC, ETH, and BYUSD, with an estimated value of nearly $1 million at the time of the transaction. I have not been able to verify this information yet.
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@morganlefay.eth
6/ Should You Invest in Berachain? 💭 Berachain's TVL (Total Value Locked) seems a bit inflated. It currently holds over $3 billion in TVL, but it should be noted that Infrared Finance holds more than $1.5 billion, making up 50% of Berachain's TVL. This TVL comes from staking LP tokens via BEX, meaning it might be double-counted. If we adjust for the real TVL, I believe Berachain is under $1.5 billion. However, in this case, I still consider the $3 billion figure because other chains might also calculate similarly (thanks to DefiLlama 📈). This results in good FDV/TVL and MC/TVL ratios for Berachain. However, the risks are substantial due to: - The Proof of Liquidity model not being widely implemented (Point 2); - High inflation tokenomics with insider positions (Point 4); - An anonymous team and FUD issues (Point 5); Thus, while the valuation looks good according to traditional methods, I would personally stay out of this one. What do you think? 🤔
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@morganlefay.eth
If you find these threads insightful, I would appreciate your ❤️ and 🔁. Thanks, everyone!
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