Proof of Liquidity is a mechanism that fundamentally aligns validators, applications and users to drive eco growth
PoL rewards active participants with rewards and introduces new forms of value generation for validators, dapps, and users who are delegating their BGT.
Validators: In addition to standard validator commissions can earn protocols' native tokens in exchange for BGT.
Dapps: Earn BGT via their reward vault to bootstrap liquidity.
Users: Receive a portion of their validators' incentives + native dapp fees in the form of HONEY.
In PoS, validators receive commissions for building blocks. On Berachain, validators receive commissions for building blocks that scale with the amount of BGT delegated to them, and have the opportunity to earn incentives in the form of dapps' native tokens in exchange for BGT.
Dapps on Berachain can deploy reward vaults that can receive BGT validators once approved through governance. These vaults incentivize users to take defined actions on a given dapp to earn the rights to stake in their vault and earn a portion of that BGT.
PoL could be used by applications to bootstrap the liquidity for their token on BEX, or earn BGT by staking into their own vault. This ties in with the concept of POL^2 dubbed by
In a PoS or dPos system, users earn rewards by staking to help secure the network.
In PoL, users can delegate their BGT to validators to earn a share of the incentives received by that validator.
Additionally, users who delegate their BGT to a validator will also earn fees collected by the native apps, or other PoL-enabled apps directing fees to delegators in the form of HONEY.
PoL creates a new way for participants to work together to grow the network while allowing each player to prioritize their interests. PoL offers participants ongoing, predictable rewards for their participation, creating conditions for long-term, sustainable growth.
🐻⛓️