Can Berachain’s “liquidity narrative” last?

Author: Frank, PANews

Against the backdrop of the overall downturn in the crypto market, Berachain ranked second in the public chain track with a net inflow of $360 million in the past month, becoming one of the few Layer 1 projects that grew against the trend. After the mainnet was launched, its total locked value (TVL) stabilized at $2.9 billion, ranking sixth in the entire network, verifying the attractiveness of its liquidity proof (PoL) mechanism to pledged funds.

However, the ecosystem is also facing some controversy. The sharp fluctuations in the price of the token BERA, the disparity in airdrop allocation, and the public reflection of the token economic model by Lianchuang. After the airdrop, can Berachain regain the trust of the community and turn from a new force into an evergreen by relying on the liquidity narrative of the PoL mechanism?

Net inflow of funds ranked second in the month, and TVL ranked among the top six

The inflow of funds is the most eye-catching data of Berachain. As of March 18, Berachain's net inflow of funds in the past month was about $360 million, second only to Base. In a period when the market is falling and the public chain ecosystems are in a downturn, it is rare for Berachain's capital inflow to be so good.

However, after careful analysis, it can be seen that Berachain's capital inflow was mainly concentrated between February 16 and March 3. During this period, Berachain's main network was just launched, the test network was launched, and the airdrop was received. Therefore, it seems to be expected that there will be a batch of capital inflows.

In addition to the net inflow of funds, Berachain's TVL has also been in a relatively stable state after the main network was launched. There has been no sharp explosive growth and no significant decline due to market changes. As of March 18, Berachain's TVL was approximately US$2.9 billion. From the overall data comparison, Berachain's TVL currently ranks sixth among all networks, and only Bitcoin, Ethereum, Solana, BSC and Tron have higher TVL than Berachain. From this perspective, Berachain's PoL (liquidity proof mechanism) consensus mechanism still has certain natural advantages in attracting pledge funds.

Among them, the most funds are pledged in Infrared Finance, which is the main application of Berachain's network liquidity consensus mechanism.

In addition to the good effect of capital introduction, network activity is also a test of the actual health index of a new public chain. According to Berachain's official data, the number of daily active users has experienced a great ups and downs. Between February 4 and February 10, the number of daily active addresses soared to more than 2 million, and then returned to normal and stabilized at around 10,000 addresses. In the past month, the average number of daily active addresses of Berachain is about 13,400. Compared with several other mainstream public chains, this data is still far behind, but it is relatively stable at present. The subsequent activity still needs a larger time sample to explain the problem.

At the data level, the most noteworthy is the performance of tokens. BERA tokens are also the source of the most controversy for Berachain recently.

From the chart, the BERA token once surged to $15.5 after its launch and then began to fall. This performance is roughly similar to the trend of most large airdrop projects. However, in the subsequent market, BERA showed great volatility. It fluctuated repeatedly in the range of $5 to $9. It often rose by nearly 90% in a few days, and then fell 40% back to the starting point. However, due to the small number of chips in the market in the early stage of the project launch, it is relatively easy to have violent fluctuations.

From airdrop carnival to trust crisis

The doubts about BERA are mainly focused on the airdrop and token economic model. Previously, PANews had reviewed Berachain’s airdrops (Related reading: Berachain airdrops “rich-poor disparity”: NFT holders received up to $55.77 million, while testnet users received only $60). In the airdrop distribution, the benefits of NFT holders and ordinary test users were very different, resulting in a huge gap between the rich and the poor.

In addition, many users felt that it was unfair for early VCs to be able to use locked tokens for staking to earn returns, even though they did not unlock the tokens. More than 35% of BeraChain’s BERA tokens were allocated to private investors, raising concerns about centralization and fairness.

Afterwards, Smokey the Bera, the anonymous co-founder of Berachain, said in an interview with Un Chained: "I don't think the criticism is completely wrong. If we could do it again and the team could start from scratch, we might not sell so much supply to VC."

In addition, a blogger named Ericonomic discovered that a co-founder of Berachain sold the 200,000 tokens he received from the airdrop. The Berachain team did not respond to this.

With the fading of the airdrop and the sharp fluctuations in token prices, Berachain's recent popularity on social media has gradually disappeared. The news of a safety accident in an ecological project has attracted greater attention.

On March 15, Berally, a platform for social trading using AI agents in the Berachain ecosystem, announced a security issue. "Part of the deployer key information was leaked, resulting in all vesting tokens being sold and withdrawn from the liquidity pool." Fortunately, Berally officials acted quickly and announced a token compensation plan of up to 120% a day later, claiming that hackers had been locked through centralized exchanges.

Airdrops are about to end, and liquidity experiments begin

Berachain's airdrop claim time will end on March 20, and when the airdrop activity ends completely, whether to rely on Berachain's PoL to continue to attract users or to create a new growth curve through the rise of other projects in the ecosystem, this may be the key issue that Berachain faces.

In the ecosystem, several key partners of Berachain have also made progress recently. Infrared is the application with the most deposited funds on Berachain. On March 4, it once again received a $14 million Series A financing, with a total financing amount of $18.75 million. From the product perspective, the highest APR of the staking product provided by Infrared reached 95.45%, which is relatively attractive.

However, given that this high-yield trading pair is WBERA-HONEY, referring to the sharp rise and fall of BERA, this yield is more important to resist the ups and downs of BERA tokens to be of practical significance.

In addition, there have been some new developments in several ecological partners such as Orderly, XrossRoad, and Moby. But in terms of importance, these new developments are not really a big progress. The main focus of Berachain officials seems to be on current governance and establishing the PoL mechanism. As of March 18, the number of Berachain validators was 60, and the PoL mechanism has not yet been officially launched.

From the official's several statements, it seems to be confident about the performance of PoL after it goes online. But the former NFT holders received massive airdrops, and the latter VCs have not unlocked them for staking. The trust that the community has left for Berachain may be insufficient, and the only thing Berachain can do is to prove itself through PoL.

In the future, whether the PoL mechanism can be transformed into a real ecological moat and whether it can find a balance between decentralized governance and user value distribution will determine whether it can evolve from a "dark horse" to an "evergreen tree". After the airdrop ends on March 20, this experiment around liquidity may really begin.