Berachain Ecosystem Under the Microscope After Mainnet

After six months of mainnet of Berachain on February 6, 2025, the protocol has gained significant attraction. The significant attraction gained by the protocol is primarily due to its massive airdrop campaign. Additionally, the protocol’s success is also attributed to the establishment of a sustainable network. Until now, we need to take a look back beyond the hype, to analyze the on-chain data, and to conduct a sober analysis of whether Berachain is truly delivering on its revolutionary promise.

A Debut That Defied Expectations

From the investors’ point of view, it’s easy to say Berachain’s launch was a success case in the crypto market during a time of “a little bearish sentiment”. Berachain not only entered the market but also fundamentally reshaped its landscape with a forceful statement. Berachain masterfully designed the initial airdrop to reward active testnet participants and engaged members of adjacent DeFi communities. The event acted as a powerful catalyst, immediately seeding the network with a broad, crypto-native user base and igniting a firestorm of on-chain activity.

At its zenith in March 2025, on-chain data platforms were reporting over 175,000 Daily Active Users (DAU), while the network itself was processing north of 219 million transactions in a year. In terms of raw user engagement, the platform’s debut was on par with some of the most successful platforms. The launches that were praised in the previous cycle had a crucial difference: Berachain’s activity was closely and fundamentally connected to its DeFi primitives from the very first block.

The user engagement, in turn, provided the fuel for its staggering financial ascent. In a timeframe that can only be described as meteoric, the chain blew past the $3 billion mark in TVL—a feat that took other celebrated chains many months, if not years, to accomplish.

After all of these developments, Berachain was capped into the exclusive rank of around the 34th blockchain with the largest fully diluted market cap comparison.

Of course, its impressive superstructure was built upon a revolutionary foundation of key applications. For instance, the liquid staking platform Infrared Finance quickly gained prominence, adeptly absorbing an impressive $1.52 billion in TVL. By allowing users to stake core assets while receiving liquid derivatives in return, it unlocked a potent layer of capital efficiency that permeated the entire ecosystem.

Berachain outpaces Ethereum in Tx count

Since March 29, @berachain had been ahead of @ethereum in transaction count for nine consecutive days. On March 30, it processed 1.54M transactions.

However, yesterday, #Ethereum regained the lead — likely due to a surge in activity… pic.twitter.com/gCBv4DNpZp

— CryptoRank.io (@CryptoRank_io) April 8, 2025

Kodiak, the flagship decentralized exchange, quickly followed, securing approximately $1.12 billion among its liquidity pools. Looking into the Berachain ecosystem, Kodiak plays a more pivotal role. Its functioned as more than just a passive vault for capital; it functioned as a dynamic, high-velocity marketplace. Its pools, leveraging sophisticated concentrated liquidity designs, showcased exceptional efficiency, with daily trading volumes frequently cresting 20–25% of its TVL.

To round out this powerful initial offering, other core applications like the lending market Dolomite or Bend provided a comprehensive suite of DeFi tools, ensuring users had everything they needed from the moment they arrived.

Berachain The Engine Room: Proof-of-Liquidity in Practice

But we should clearly see what’s truly under the hood. The true innovation, in the heart of the Berachain thesis of development, is its Proof-of-Liquidity consensus. Take the first look into the fundamental incentive misalignment that plagues traditional Proof-of-Stake (PoS) networks. In some typical PoS blockchains, validators are compensated in the network’s native gas token for the crucial tasks of securing the chain.

The applications built atop that chain, however—the vibrant DEXs, the essential lending markets, the immersive games—have little use for the gas token. Their lifeblood is deep, stable liquidity in assets like ETH or USDC. Such an arrangement creates a structural schism: the network’s security budget is not directly tethered to the prosperity of its ecosystem.

Proof-of-Liquidity ingeniously inverts this model, forging a symbiotic relationship—a closed-loop system where network security and application-layer success are one and the same. The process functions as a powerful, self-reinforcing flywheel:

1. First, a user provides liquidity to a whitelisted pool on Kodiak—a HONEY/USDC pair, for instance.
2. In exchange for this vital service, the protocol rewards the user with its non-transferable governance token, BGT.
3. Because BGT cannot be sold on the open market, its sole utility is to be delegated to a network validator, giving that user a voice in the chain’s governance.
4. Consequently, a validator’s weight in the consensus process, and thus its power to direct the flow of future BGT emissions, is determined by the total amount of BGT delegated to it.
5. Finally, in return for this delegation, the validator shares a portion of the real yield it earns from the very applications it helps secure. These rewards are not paid in abstract tokens but in tangible assets like HONEY and USDC, derived from transaction fees.

The Berachain design carries profound implications. It organically transforms liquidity providers from passive participants into the ultimate arbiters of the network’s direction, turning inert capital into an active, productive stake in the chain’s collective security. The on-chain data provides compelling evidence that this model is flourishing. In August 2025, a healthy total of 69 active validators robustly secured the network. Even more telling is that a figure of about 18.31 million BGT, accounting for approximately $38 million, has been delegated to the network.

Nevertheless, no system is without its potential pressures. A critical metric for decentralization is the “Nakamoto Coefficient”—the minimum number of entities required to collude to compromise the network. With the top 10 validator accounting for more than 45% of the total BERA tokens staked, the network is concerned about decentralization. While this level of concentration has not yet reached a crisis point, it remains a crucial data point that the community must diligently monitor and manage to preemptively guard against the long-term risk of power consolidation.

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A Litmus Test: The Tale of the HONEY Stablecoin

The stability and deep integration of a DeFi ecosystem’s native stablecoin often serve as an accurate barometer for its overall health. For Berachain, this pivotal role is filled by the HONEY stablecoin, and its journey has been a compelling narrative of both fragility and, ultimately, resilience. Far more than just maintaining its peg, HONEY has become intricately woven into the economic fabric of the ecosystem, now boasting a circulating supply market cap of about $41 million, according to Berascan.

Substantial and highly liquid on-chain markets support HONEY. The primary HONEY pool on Kodiak holds more than $15 million in liquidity, ensuring minimal slippage for traders and providing a steadfast foundation upon which other protocols can confidently build.

However, a severe test was placed on HONEY back in June 2025. Amidst a sharp, market-wide downturn, HONEY experienced a brief but significant de-peg event, with its price momentarily tumbling to around $0.82. Analysis from the time suggests that the event was triggered by a cascade of liquidations in the native lending market, Bend, which was then amplified by the broader market panic.

The response, however, was a powerful testament to the community’s cohesion and the system’s antifragile design. Through swift, coordinated governance actions to adjust risk parameters on Bend, coupled with large-scale arbitrage from savvy market participants, the peg was decisively restored within 48 hours. Although the incident exposed a potential vulnerability, the swift and efficient recovery ultimately strengthened the system’s long-term trust.

For more: Berachain Price Prediction: BERA Forecast Pre-TGE

The Path Forward: Navigating a Perilous Landscape

Despite its cascade of early successes, Berachain’s future is by no means guaranteed. The ecosystem is now navigating the most challenging phase of its life cycle: the post-airdrop era. With the initial speculative excitement having subsided, the network faces the crucible of proving it can retain capital and users based on sheer utility and a superior user experience, rather than just the allure of free tokens. In which, we could see the difficult work of fostering a genuine, thriving community of long-term builders and believers.

Moreover, the external environment remains intensely competitive. Berachain is not operating in a vacuum; it is vying for attention, talent, and market share against the immense gravitational pull of Ethereum, the high-speed and low-cost user experience of networks like Solana, and the ever-burgeoning strength of Layer 2 solutions such as Arbitrum and Optimism. Each of these formidable rivals is competing for the same finite pool of developers, users, and capital.

In this context, Berachain’s odyssey is far from over. The on-chain metrics paint a lucid picture of a powerful, intelligently designed machine that has executed its initial game plan with near-flawless precision. It has successfully attracted capital, captivated users, and validated its core thesis in the unforgiving arena of a live environment. And yet, the challenges ahead are substantial.

The coming months will be defined by retention, not just attraction. The pivotal questions remain: Will the Proof-of-Liquidity model be sufficient to prevent the slow, inexorable bleed of liquidity that has plagued so many other alternative L1s? Can the community effectively use its governance tools to manage the centralizing pressures on its validator set? The foundation Berachain has built is undeniably strong, but the most arduous work has only just begun. The next chapter in its story is now being written, one block at a time.

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