Berachain V2: An explanation of the changes, how it affects PoL dynamics and why it’s an important next step
Knower Bera
Knower Bera
5 min read
Berachain V2: An explanation of the changes, how it affects PoL dynamics and why it’s an important next step

Some beary big news!

Well, here we are. 

Berachain is approaching mainnet, and it’s time to announce a big upgrade - Berachain V2. What started as an NFT collection of cartoon bears evolved into something massive, a new type of blockchain that’s designed to address many of the issues around scaling security in tandem with user and application growth. Before explaining the differences between V2 and V1, here’s a very brief refresher on Berachain’s mission. 

Berachain revolves around its innovative consensus mechanism, Proof-of-Liquidity (PoL) - a system that balances incentives between validators and ecosystem actors (users & applications) to create a shared set of goals for scaling liquidity and economic security simultaneously. At a high level, Berachain is an EVM-identical L1 that turns liquidity into security, all powered by PoL.

Berachain V2 represents a massive leap from V1, introducing a novel architecture that improves on execution client diversity and consensus to enable an identical experience for EVM smart contract development. Let's dive in.

Why V2?

New blockchain architectures are often built for developers, with features and functionality that only they can really appreciate. The definition of what makes a blockchain modular is still loose, but most of the debate focuses on blockchain processes occurring behind the scenes - users are not typically center stage. Berachain V2 approaches its design from the opposite angle, creating a modular blockchain that stays true to its core focus of aligning incentives and driving net-new user behaviors through PoL. 

Berachain V2 is not a full chain rewrite.

Most of the major changes target Berachain’s technical architecture, keeping its tri-token model, PoL, and incentive alignment at the protocol layer largely the same. One important change from V1 to V2 is the decision to move away from Polaris. Berachain V1’s EVM execution was coupled closely with CometBFT consensus, leaving the mempool unable to keep up with demand for blockspace as Berachain broke records for the number of users flowing into a network. Hitting the limits of Polaris showed that a new approach to execution and consensus interaction was necessary prior to mainnet. 

Berachain V2 introduces BeaconKit, an EVM-focused development framework designed to improve the Berachain experience. Taking principles from ETH2’s modular separation of consensus and execution, developers can now utilize any execution client on Berachain V2 with BeaconKit. 

BeaconKit fixes many of the issues that plagued V1 through its ability to utilize any existing Ethereum execution client - such as Reth, Geth, or Nethermind. V1 saw execution clients gossiping unnecessary transaction info to the mempool; V2 addresses this through the introduction of single-slot (instant) finality, previously impossible on Polaris. 

Berachain V2 and BeaconKit’s structure make Berachain EVM identical, rather than just EVM compatible via Polaris precompiles. Berachain V2’s use of an ETH2-like system enables a blockchain that’s identical to the EVM experience developers know and love, while enabling that entirely new and exciting user experience via PoL. 

It’s worth noting Polaris also made use of CometBFT, but struggled due to a lack of separation between consensus and execution. Bundling these two functions together led to an issue where the network constantly hit an execution bottleneck due to an abundance of transactions - Polaris simply couldn’t keep up. BeaconKit removes the need for Polaris’ implementation of precompiles for EVM equivalency, instead making the network EVM identical for developers out of the box. 

Beyond the technical adjustments, Berachain’s core stakeholders remain the same. Validators direct the flow of BGT and maximize delegations with aligned incentives toward heightened ecosystem activity. BGT holders and LPs participate in governance and work to maximize BGT rewards through close collaboration with validators. Applications within the ecosystem enter the BGT flywheel and spin up creative incentive loops; their collaboration with other protocols and commitment to users remains essential. 

V2 introduces some minor adjustments to the process of validator setup, mainly on activation token selection and the number of validators available at launch. Berachain originally planned to set a cap of 100 validators with a BGT bond. V2 raises this to a soft limit of 256 and, to ensure sufficient economic stake to secure the massive TVL expected on Berachain, validators will now stake BERA to post an activation bond. 

These changes don’t affect the fundamental utility of BGT - validators begin their stake with zero delegated BGT weight. The only way they can earn additional BGT is to actively participate in the ecosystem through liquidity provision, and a validator’s delegation of BGT cannot be slashed - only their activation bond, paid in BERA tokens. 

The basics of BGT delegation remain the same. A validator’s gauge weight and block rewards only increase with a simultaneous increase of delegated BGT. There’s an equal chance for any validator to produce a block, and BGT rewards are distributed based on a validator’s votes. So, instead of a validator with a higher BGT delegation producing more blocks on average with uniform rewards, an individual validator’s block reward is proportional to its delegated BGT (when it produces a block).

Modularity as a means to an end, not the main attraction

Berachain V2 takes the best of ETH2 execution dynamics and the best of single-slot finality to produce an experience unlike anything available, minimizing the necessity for users to fully understand the ins-and-outs of modular architectures. For developers, the optionality improves the V1 experience, and eases the process of deploying new or existing code to a new chain environment. For users, transacting on Berachain will feel smoother and offer a superior experience from Berachain V1.

PoL focuses on mitigating the issues that other consensus mechanisms face. Berachain V2 keeps the modular design space separate from the user experience - everything discussed runs under the hood, creating a superior experience unavailable on any other chain- driven by modular liquidity. 

Modular liquidity is Berachain’s tangible use case. Other blockchain ecosystems struggle with siloed liquidity - look at any dApp and determine whether or not their native token / core value proposition is extendable beyond their application’s ecosystem. Most often the answer is no. 

Applications might be capable of building out robust communities on-chain and extending their functionality across the broader DeFi ecosystem, but it’s difficult for these same applications to take market share that an L1 might. With Berachain, approaches to scaling applications are taken and utilized to expand upon the act of growing a blockchain. With the aligned interests of all parties on Berachain, liquidity isn't siloed and communities can grow in more collaborative ways. PoL enables that shared liquidity between an entire ecosystem, while simultaneously growing the security of Berachain. 

Berachain V2 is a modular blockchain, but, more than that, it’s a blockchain that drives utility through collaboration.

An ecosystem built on modular liquidity must derive its functionality from its architecture - instead of isolating aspects of modularity to development or architecture, V2 brings the user experience to the forefront. Berachain applies native horizontal scalability to every application deployed, powered by incentive alignment at the protocol layer. Users, dApps, and validators all work in tandem, growing the ecosystem and allowing participation at every level of the stack. 

At the end of the day, Berachain V2 is more than just an upgrade - it’s a culmination of learnings from V1 and is specifically designed to make developers’ lives easier to better support a large and growing community of beras come mainnet launch. If you’re eager to build on Berachain V2 or simply want to learn more about its new features, check out the docs here. Thanks for reading, beras.