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What is Proof-of-Liquidity? 🤝

Proof-of-Liquidity (PoL) is a novel consensus mechanism that borrows from the Proof-of-Stake (PoS) concept of securing a chain by providing an initial stake with the native gas token. PoL builds upon PoS by introducing an additional soulbound governance token that both determines the potential reward weight for a staker, through delegation by others, and is rewarded to parties that have provided liquidity to the chain through governed reward vaults.

Proof-of-Liquidity Flywheel

This separates token responsibility for gas and security from tokens used to govern chain rewards.

For Berachain, that is the native gas token $BERA, and the non-transferrable Berachain Governance Token ($BGT).

Proof-of-Stake vs Proof-of-Liquidity

Read more in Proof-of-Liquidity Overview