What Is the Berachain?

• Built by the pseudonymous Bera Builders collective

• Identical to the Ethereum Virtual Machine, which lets Solidity contracts migrate without changes

• Uses Proof of Liquidity to encourage deep on‑chain liquidity

• Public mainnet expected after the current security‑audit program

Berachain is an ETH‑compatible, Layer 1 blockchain in public testnet (code‑name Artio) as of July 2025. It replaces traditional Proof of Stake with Proof of Liquidity. This means staked assets stay available for DeFi. A tri‑token design separates gas fees, governance voting, and stable‑value functions.

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

EVM‑identical architecture

The chain mirrors every Ethereum opcode, gas rule, and future upgrade, so tools such as MetaMask, Hardhat, and Foundry connect with no adjustments.

Proof‑of‑Liquidity consensus

Validators post whitelisted liquidity‑pool tokens rather than idle coins. These LP tokens continue earning fees while also staking, which keeps capital productive.

Wallet compatibility

Any wallet that supports custom EVM networks (for example, MetaMask, Rabby, Ledger Live) connects by adding the Berachain RPC endpoint. Hardware wallets sign the same secp256k1 transactions used on Ethereum.

BERA

Gas and block‑reward token. The inflation schedule and total supply will be finalized at mainnet genesis.

BGT

Non‑transferable token earned by validators and liquidity providers. It is used for on‑chain voting, grant approvals, and parameter changes.

HONEY

Over‑collateralised stablecoin that targets 1 USD. It is minted through debt positions that lock in approved collateral.

BEX

Native decentralised exchange that rebates part of gas costs to BGT voters.

BEND

Lending market where users borrow HONEY or leverage staked assets.

BERP

Perpetual‑swap platform with up to 20 times leverage on major trading pairs.

Additional projects in development include NFT markets, liquid‑staking derivatives, and cross‑chain bridges.

• EVM identical execution layer: seamless contract migration from Ethereum

• Proof of Liquidity: staked capital continues to earn DeFi yield

• Tri‑token design: gas (BERA), governance (BGT), and stablecoin (HONEY) functions are separate

• BeaconKit client framework: modular consensus upgrades without hard forks

• Optional gasless or subsidized transactions for selected on‑chain actions

Pros

• Staked liquidity remains usable in DeFi

• Easy migration for Ethereum‑based applications

• Separate tokens align economic incentives

Cons

• Mainnet not yet live so security is untested

• Core builders remain pseudonymous

• Future regulatory status is uncertain

The Artio testnet hosts several early DeFi applications. Users can trade ERC‑20 pairs on BEX, borrow HONEY on BEND, and open leveraged positions on BERP. Production deployments will begin after the mainnet launch.

• Age: Ethereum launched in 2015 while Berachain is still in testnet.

• Consensus: Ethereum uses Proof of Stake; Berachain uses Proof of Liquidity.

• Token design: Ethereum combines gas and governance in ETH; Berachain separates those roles into BERA and BGT.

• Liquidity: Ethereum staking locks assets; Berachain staking keeps liquidity active.

• Ecosystem size: Ethereum hosts thousands of applications; Berachain is an emerging network with growth potential.

No official airdrop details exist as of July 2025. Community speculation suggests that early testnet users and liquidity providers could receive BERA or BGT, but snapshots, eligibility rules, and token amounts remain unannounced.

US taxpayers should treat:

• Airdrops or faucet distributions – ordinary income at fair‑market value on receipt

• Validator or staking rewards – ordinary income on the credit date; later sales create capital gains or losses

• Swaps on BEX or trades on BERP – capital gains or losses reportable on Form 8949

• Liquidity‑pool incentives such as extra BGT – ordinary income when credited

Non‑US residents must follow their domestic capital‑gains and income statutes.

Accurate records are critical. Capture the USD value for every reward, swap, and airdrop, and track gas fees to adjust cost basis. File Form 8949 with Schedule D for disposals, and Schedule C if you operate a validator as a business.