Incentives are one of web3’s strongest growth tools—and one of its biggest traps. The rewards playbook is effective at gaining attention, but it creates a dependency. Every dApp and web3 leader recognizes the challenge: incentives help get traction, but how can you convert those users into long-term, loyal contributors? Users get accustomed to earning outsized rewards for their efforts. And instead of early adopters, bought into a long term vision, the project attracts “mercenaries” who prioritize short-term gains. These users inevitably churn or flood Discord with “wen price up?” messages when boosted incentives disappear. So what's the alternative?

First, let’s recognize that this isn’t just a crypto problem. Startups across every industry face the same dilemma. Imagine a new gym throws a big launch party. They offer free classes and giveaways to draw the neighborhood in. The room is full. People are grabbing t-shirts, admiring the space, and saying how much they’ve wanted a place like this to open. The owner feels proud and hopeful. But once the freebies end, only a fraction of the crowd shows back up for a class, and even fewer sign up for a membership. 

Web3 projects face a similar cycle. Rewards like airdrops or boosted yields attract an opportunistic audience looking for immediate returns. We’ve all watched high-profile dApps attract massive user bases and fundraise at huge valuations, only to see engagement crash once the initial hype wears off. So why can’t these projects sustain momentum? Many would say no real world use case, missing core features, poor UX, or bad marketing. But what if the real problem is that we are misusing incentives? 

The gym owner, and most of web2, has learned that you can’t keep offering intro promotions to the same customers. A free smoothie with every visit isn’t profitable, nor will it attract the right crowd. But making memberships more rewarding—through discounted personal training, workout gear, and member-only events—can build a community that values the services being offered. Similarly, web3 projects need to align incentives to retain users beyond initial promotions. Growth strategy must include mechanisms, and budget, for both user acquisition and retention. 

Enter Berachain, which takes on this challenge with a completely new framework. Berachain’s Proof of Liquidity (PoL) framework shifts the focus from short-lived rewards to sustained, engaged growth. It creates a network-level structure where user contributions directly strengthen the dApp ecosystem, aligning incentives for the long haul.

How Proof of Liquidity Changes the Growth Game

Today’s Proof of Stake networks fall into the same trap as many dApps, luring developers with grants and other unsustainable incentives. Most chain emissions are directed to stakers and validators who have minimal interaction with dApps and users. With Proof of Liquidity, Berachain interconnects all parties in the ecosystem. Beyond simply securing the chain, the majority of the network emissions are allocated to dApps and protocols for rewarding onchain user activity.

This mechanism offers a way to reward users without increasing customer acquisition costs for dApps. Users earn $BGT, Berachain’s native governance token, out of the chain’s emissions in return for completing dApp-defined actions. While DeFi-native activities like liquidity provision are the most discussed use cases, developers on Berachain are already using PoL to incentivize health, gaming, and social behaviors. Unlike traditional staking, where users just lock up assets, rendering them unproductive, PoL rewards a breadth of actions that actively benefit the ecosystem. These rewards help create a self-sustaining cycle of engagement and value creation.

Let's again imagine our local gym, but this time the gym is part of a larger shopping center. The center hosts events to attract visitors and supports each shop with incentives like free parking with purchase. Similarly, PoL ensures that incentives flow not just to the network’s security layer but directly to the apps and users actively building value, keeping Berachain’s ecosystem dynamic and aligned for growth.

By transforming part of the chain’s emissions into loyalty-building rewards, PoL fosters a collaborative environment where security providers, developers, and users are all invested in the network’s success. Each contribution supports a broader goal: an engaged community with high retention that grows together over the long term.

How PoL Turns Incentives into Experiences

Just as e-commerce buyers will never give up looking for a discount, new crypto users will always seek out some type of reward. The power of Proof of Liquidity is that it accepts this reality and builds a framework that uses financial incentives as a jumping off point, not an end in-and-of-itself. To see meaningful financial rewards, users, dApps, and validators must make actively contributing to the ecosystem a habit. As they engage more and more with dApps and the community, new motivations and value propositions emerge that go beyond transactional rewards. Someone might start out chasing rewards, but over time, they stay for the sense of belonging, social connections, dApp utility, or simply because they’re having fun.

It’s no different than the gym analogy. At first, a new client joins to lose weight or take advantage of a deal, but they end up making friends, discover a love for fitness, and become part of a vibrant network that keeps them coming back. Berachain is uniquely positioned to understand this, because its story as a community reflects this same evolution. What began as a few individuals drawn by curiosity and incentives has developed into an ever-growing, largely self-sustaining ecosystem.

In the end, chains that prioritize their communities and offer long-term incentives unlock more than just value. They create environments where people feel connected and genuinely want to stay. This is why Berachain isn’t just another L1 claiming to offer new; it’s about offering better. Proof of Liquidity fosters a system where every stakeholder, from dApp builders to validators to end users, contributes to something greater than themselves. This is the path to true adoption in web3: networks built on collaboration, alignment, and sustainable growth. It’s not just about what you can earn—it’s about how enjoyable and meaningful the experience can be.