PoL enables protocol-owned liquidity. Instead of paying LPs to rent liquidity for your token, protocols can tap into the chain’s native emissions as a source of yield to bootstrap token liquidity.

1) liquidity?

2) benefits of owning liq

3) actionable steps to bootstrap… pic.twitter.com/wd1eQT9ClQ

— Berachain 🐻⛓ (@berachain) July 1, 2024

Typically, protocols participate in liquidity mining programs that pay LPs to provide liquidity with their token. The downside is there's ongoing rent for this liquidity, and you increase the emission of the native token, resulting in inflation of the circulating supply.

— Berachain 🐻⛓ (@berachain) July 1, 2024

Builders can use PoL to bootstrap their liquidity:

3) Redeem BGT into BERA and repeat step 1 and 2 to compound BGT earnings

2) Keep a percentage of token supply to incentivize a validator to direct emissions to their pool

3)Redeem BGT into BERA and repeat step 1 and 2 to…

— Berachain 🐻⛓ (@berachain) July 1, 2024

Proof of Liquidity takes liquidity metagames that would otherwise happen in private markets, external to the chain, and implements it at the protocol-level, creating a more efficient market. Check out these posts by @eatsleepyeet on Protocol Owned Liquidity…

— Berachain 🐻⛓ (@berachain) July 1, 2024