Introduction

Berachain’s governance is both innovative and essential to the network’s health and operational capacity. With Proof of Liquidity (PoL) at its core, Berachain represents a unique experiment in blockchain economics, social policy, and competitive markets. In recognition of these complexities and to ensure the best interests of the community, the Berachain Foundation has formed the BGT Foundation, an independent entity representing the collective interest of BGT (Bera Governance Token) holders and carrying out actions on their behalf.

The BGT Foundation embraces a conservative, stepwise approach to supporting PoL’s growth, with a focus on stability and security of the Berachain protocol. This document outlines the core focus areas and the BGT Foundation’s vision for the sustainable development of Berachain’s governance ecosystem.

Stabilizing the Network & Facilitating BGT Distribution

Network Stabilization

The primary goal is to allow Berachain’s core infrastructure and consensus to stabilize before introducing any major governance or economic policy changes. This is particularly important because PoL is a new model that relies on actively providing liquidity, and rapid or aggressive expansions of PoL-eligible venues could hinder the network’s ability to establish stable market dynamics. By proceeding cautiously, Berachain can ensure that its foundational elements are secure and resilient before scaling up policy changes.

Distribution of BGT

BGT is effectively a “fair launch” token that is distributed to liquidity providers (LPs) and validators/stakers based on Berachain’s PoL mechanism, ensuring that individuals who contribute to the network are directly rewarded for their efforts. This distribution mechanism not only incentivizes participation from the outset but also helps establish a strong liquidity foundation, benefiting the broader community as the ecosystem grows. Moreover, as BGT gradually disperses throughout the network, it fosters a decentralized governance structure, aligning incentives across a diverse range of stakeholders. By entrusting governance power to a wide base of users who have actively contributed to Berachain, the protocol cultivates a resilient and community-driven decision-making process. This inclusive model helps safeguard against centralized control and positions the network to evolve in a manner that serves the collective interests of all participants.

Encouraging Active Liquidity

Under Berachain’s PoL mechanism, validators and BGT holders are encouraged to favor pools that demonstrate robust liquidity, ensuring that capital is allocated where it can have the most impact. By directing rewards and incentives to pools that consistently maintain healthy liquidity, the network not only encourages effective price discovery and low slippage but also fosters stable market operations. In turn, this alignment of incentives dissuades the unnecessary proliferation of pools that lack sufficient liquidity, preventing the ecosystem from becoming overly fragmented and strained. As a result, the network as a whole benefits from a more consolidated and resilient foundation, enabling participants to transact more efficiently and securely.

Progressive Rollouts

Phased deployment in Berachain begins by focusing on native Berachain Dex (BeraSwap) pools to establish a stable liquidity baseline. Once this core foundation is in place, third-party dApps and new reward vaults move through a structured deployment phase, during which the community evaluates proposals for security, alignment, and broader ecosystem considerations. By introducing reward vaults incrementally and leveraging a transparent, community-driven feedback loop for governance and risk assessments, Berachain aims to strike a balance between innovation and caution. 

Governance Phase Zero

BeraSwap-only Rewards Vaults

At public launch, only initial major Berachain Dex (BeraSwap) pairs (to be disclosed in the near future) will receive BGT emissions; however, anyone will be free to post a RFRV - Request for Reward Vault (BeraSwap) (to be shared in the near future) to propose a new BeraSwap pair as well as up to 2 incentive tokens for the respective pairs.

Snapshots for proposals will be taken every week and at the end of the vetting process, and following the BGT Foundation’s and Guardians’ (described further below) assessment, vaults will be deemed eligible to receive BGT emissions if they meet the community’s criteria.

This measured approach ensures that each addition aligns with the community’s overarching goals of preserving stability, promoting robust market dynamics, and ensuring the security of the network. By taking this transparent approach, the Berachain community expects to gradually expand liquidity while safeguarding the health of the broader ecosystem. Ultimately, it is expected to help foster a resilient and trustworthy marketplace, where new pairs enrich user experience without compromising security or efficiency.

Guardians

During this phase, Guardians, a council consisting of various technical, economic and community contributors to the Berachain ecosystem, will assess, together with the BGT Foundation, governance decisions being proposed by the community of BGT holders. 

Governance Phase One

Full PoL Activation

Within a few weeks after launch, Berachain expects to transition to Governance Phase One, where PoL will be enabled not just for BeraSwap pools, but for any protocol.

During this phase, anyone will be able to propose any protocol pool to be eligible for BGT emissions. The BeraSwap pools RFRV template will still be active, but in addition to it a new general RFRV will be available for any given protocol.

Snapshots for proposals will still be taken every week and at the end of the vetting process, and following the BGT Foundation’s and Guardians’ assessment, vaults will be deemed eligible to receive BGT emissions if they meet the community’s criteria.

Expansion

As Berachain’s enshrined applications continue to evolve, additional PoL-eligible reward vaults are expected to be introduced by the community for projects beyond the core BeraSwap. This expansion is expected to specifically target dApps built on Berachain and Layer 2 solutions rolling up to Berachain. By directing BGT rewards to these external projects, once introduced, the network can incentivize a wider range of developers to build atop Berachain’s infrastructure, ultimately boosting liquidity and enhancing the ecosystem’s resilience. Through this broadened incentive model, various DeFi use cases from novel lending protocols to advanced and novel dApps can flourish, deepening overall market participation and fostering long-term ecosystem growth.

Governance Phase Two

Decentralization

Within a few weeks after launch, Guardians are expected to migrate governance to BGT holders, enabling them to make additional proposals. To safeguard the network against malicious actors, Guardians will retain the power to veto certain proposals under exigent circumstances, if they deem it to be malicious or materially detrimental to the network as discussed further below. Guardians will play no affirmatory role in enacting or carrying out decisions made by on-chain governance. 

During this phase, a minimum requirement of 10,000 BGT to present a proposal is expected to be proposed and enacted by the community in order to prevent proposal spamming. 

Based on the community’s current proposal, new governance proposals are required to be live for 5 days and they would need to reach a 20% quorum of voters as well as at least 51% of YES votes in order to be enacted. Following the voting period, there will be a 2-day window before the proposal is implemented. During this window, the BGT Foundation will seek, as appropriate, opinions from Guardians, who may veto the proposal under exigent circumstances if they deem it to be malicious or are materially detrimental to the network.

BGT holders will serve as the driving force behind the network’s decentralized governance, as they possess the power to propose and vote on new PoL pairs for Berachain as well as any changes to the network. In this process, the BGT Foundation is expected to act as a facilitator by coordinating discussions and ensuring the necessary frameworks are in place for fair and transparent decision-making. Once a community member initiates a proposal, it is put through open forums and risk assessments, enabling all stakeholders to weigh the potential benefits and drawbacks. Every step from proposal submission to the final vote is expected to be thoroughly documented and made publicly accessible, preserving an environment of trust and inclusivity. Through this structured and transparent governance model, the community can collectively shape the direction of the ecosystem, driving innovation while maintaining the foundational principles of security, stability, transparency and fairness.

Conclusion

The phased rollout of PoL serves as a forward-looking roadmap for the BGT Foundation to foster a secure, decentralized, and growth-oriented Berachain ecosystem. By initially focusing on a small set of native BeraSwap pools, the network can establish a stable liquidity baseline and gather security insights before opening up to third-party dApps through a structured process. This measured approach not only helps mitigate sudden market disruptions but also offers developers and community members a clear path for proposing new vaults or dApp integrations.

To maintain robust governance, the community should be provided with ample time to evaluate each proposal’s security, alignment with ecosystem values, and potential risks. Guardians, equipped with veto authority under exigent circumstances, can step in when necessary to protect network health. 

Ultimately, by fostering the Berachain community’s culture of transparent governance and thoughtful discussions, and providing a forum for organic discussions to take shape and form, the BGT Foundation aims to help guide Berachain’s PoL framework toward a resilient and inclusive future–one where validators, developers, and token holders all actively participate in the sustainable, long-term growth of the community.