What Is Berachain?

• Launched its public mainnet on February 6, 2025

• Uses an Ethereum-compatible execution environment that supports Solidity smart contracts and familiar developer tools

• Runs on the BeaconKit consensus framework

• Uses Proof of Liquidity to direct network rewards toward validators, applications, and users

Berachain is an Ethereum-compatible Layer 1 blockchain that launched on February 6, 2025, after testing on its Artio and bArtio test networks.

Its main difference from other Layer 1 blockchains is Proof of Liquidity (PoL), a system that directs network rewards toward applications and economic activity. Validators secure the network by staking BERA, while eligible applications and liquidity providers take part in separate reward programs.

Berachain has also changed its token system since launch. A July 2026 upgrade replaced BGT rewards with rewards paid in BERA, and the network's stablecoin, originally called HONEY, became BUSD in August 2026.

Here's a look at Berachain's features and how it works, broken down point by point.

EVM-identical architecture

Berachain uses an EVM-identical execution environment, so developers can deploy Solidity smart contracts and use familiar Ethereum tools such as Hardhat and Foundry. Wallets like MetaMask also support the network, though you generally need to select or add Berachain before sending transactions.

Proof-of-Liquidity consensus

Validators stake BERA to secure the network and produce blocks. Proof of Liquidity adds a reward system on top that sends WBERA block rewards to validators and approved reward vaults.

Applications use these vaults to attract liquidity and users. People who stake eligible assets in a vault can earn WBERA, and BERA holders can also stake through sWBERA to share in network rewards.

Wallet compatibility

Berachain supports EVM-compatible wallets, including MetaMask and Rabby. You can add or select Berachain in your wallet's network settings. Hardware wallet support depends on the device and the software you connect it to.

BERA

BERA is Berachain's native gas and staking token. It launched with a genesis supply of 500 million tokens in February 2025. Since the July 2026 upgrade, network rewards are paid in WBERA, a wrapped version of BERA. Berachain lists annual inflation at about 5%, subject to governance changes.

BGT

BGT was Berachain's original non-transferable governance and rewards token. It was deprecated on July 8, 2026, when a network upgrade stopped issuing it. BGT no longer controls validator rewards, block rewards, or governance, and existing holders can redeem remaining BGT for BERA through Berachain's official Hub.

BUSD (formerly HONEY)

Bera USD (BUSD) is Berachain's native stablecoin, fully backed by collateral and designed to stay near $1. It was called HONEY until August 19, 2026. Its contract address didn't change, so existing holders didn't need to swap or migrate their tokens. You can mint BUSD by depositing approved collateral into Berachain's stablecoin vaults, or buy it on supported exchanges.

sWBERA

sWBERA is a yield-earning token you receive when you stake BERA or WBERA in Berachain's staking vault. Instead of paying rewards as extra tokens, the vault increases the amount of WBERA behind each sWBERA as rewards build up. Unstaking through the vault takes seven days.

BEX

BEX is Berachain's native decentralized exchange. You can swap tokens and provide liquidity through its pools, and eligible liquidity positions can earn Proof of Liquidity rewards.

Bend

Bend is Berachain's lending platform, built on Morpho. You can supply assets to lending vaults or borrow against supported collateral, with the risk of liquidation if collateral values fall.

Proof-of-Liquidity reward vaults

Reward vaults pay WBERA to users who stake eligible assets. They help applications attract liquidity and steer network rewards toward activity on Berachain.

Berachain also supports independent DeFi apps, including decentralized exchanges, lending protocols, staking services, and cross-chain tools. These apps run separately from the network's core infrastructure.

• Ethereum compatibility: Supports Solidity smart contracts and widely used EVM developer tools.

• Proof of Liquidity: Directs network rewards toward validators, applications, and eligible liquidity providers.

• BERA staking: Uses BERA for transaction fees and validator staking.

• sWBERA rewards: Lets holders stake BERA and share in network rewards.

• BeaconKit: Provides the consensus framework used to run and upgrade the network.

Pros

• Familiar developer tools for Ethereum-based applications

• Reward programs that steer incentives toward DeFi activity

• BERA staking through the network's updated rewards system

Cons

• Smart contract bugs and other DeFi security risks

• Possible losses from liquidity provision, leverage, or volatile token prices

• A complex rewards system that has already changed significantly

Berachain has supported live DeFi applications since its February 2025 mainnet launch. BEX offers token swaps and liquidity pools, and Bend offers lending and borrowing. You can also stake in eligible Proof of Liquidity reward vaults or stake BERA through sWBERA.

Independent apps offer more trading, staking, and lending options. Check each protocol's smart contract risks, fees, and withdrawal terms before depositing funds.

• Launch: Ethereum launched in 2015, while Berachain launched its mainnet in February 2025.

• Consensus: Both networks use token staking for security. Berachain adds Proof of Liquidity to steer rewards toward applications and users.

• Tokens: ETH pays Ethereum transaction fees and secures its network. Berachain uses BERA for gas and staking, WBERA for rewards, and BUSD as its stablecoin.

• Staking: Ethereum supports direct and liquid staking. Berachain offers validator staking, sWBERA, and application reward vaults.

• Ecosystem: Ethereum has a longer track record and a much larger app ecosystem. Berachain focuses on tying network rewards to DeFi activity.

Berachain announced its BERA airdrop in February 2025, allocating 79 million BERA, or about 15.8% of its original supply. Recipients included Artio and bArtio testnet users, ecosystem NFT holders, community contributors, Boyco depositors, and selected partners.

This was a one-time distribution tied to the February 2025 mainnet launch, not an upcoming airdrop. Rely only on official Berachain announcements, and avoid websites promising guaranteed free tokens.

For US taxpayers, Berachain transactions follow the same federal rules as other crypto, which the IRS treats as property.

• BERA airdrops: Airdropped tokens may be taxable as ordinary income when you gain dominion and control over them. The IRS has not issued comprehensive guidance for every type of promotional crypto airdrop.

• Staking rewards: Newly received BERA or WBERA rewards are generally ordinary income when you gain control of them. Rewards that build up inside sWBERA need separate analysis, because they raise the token's redemption value rather than arriving as new tokens.

• Token swaps: Selling BERA or swapping it for another crypto is generally a taxable disposal, with a gain or loss based on your proceeds and cost basis.

• Liquidity pools: Deposits and withdrawals can have different tax results depending on whether you exchange assets for new tokens. The IRS hasn't published rules covering every liquidity pool setup.

• BGT redemptions: Redeeming old BGT for BERA needs careful review, since a token's deprecation doesn't settle how each redemption is taxed.

Trading perpetual futures or other derivatives may follow different tax rules from ordinary crypto sales. Taxpayers outside the US should follow the rules in their home countries.

Keep records of your Berachain transactions, including wallet addresses, transaction hashes, purchase dates, cost basis, rewards, and fees.

For US taxpayers, sales and swaps go on Form 8949 and Schedule D. Airdrop and staking income is generally reported on Schedule 1, not on Form 8949. Schedule C applies only if your activity counts as a business, so running a validator doesn't automatically put every reward there.

Gas fees may affect your cost basis or proceeds, but not every fee is separately deductible. Since January 1, 2025, the IRS has also generally required you to track cost basis wallet by wallet or account by account. Learn more in our guides to crypto staking taxes and how to report cryptocurrency on taxes.