🐻‍❄️ BERA signals

Hey!

My feed is full of debate over whether the crypto cycle has peaked. What better time to load up on all things Berachain? 

Katherine Ross from the Empire newsletter is here to take it away. Have a great rest of the week!

— Kate Irwin

Bera with me

I had a chance to catch up with Smokey the Bera, and there’s a few things I want to chat about this morning. 

The first is the tokenomics upgrade that just happened with BERA, which Smokey explained is designed to make BERA “more, I'd say, easy to use for people in terms of just thinking, ‘Okay, I'm someone who is not deep in the weeds, how do I take BERA and do something productive with it?’”

But let me back up — the upgrade basically takes BERA from a token simply used for both staking and gas, and gives it the ability to potentially become a revenue-generating asset. 

Right now: Berachain has BERA and BGT. 

“The underlying change that we've put forward … is that now a portion of those incentives that were typically flowing towards BGT from the ecosystem projects will actually go towards buying back BERA, and people who choose to stake their BERA will effectively be able to earn their yield from those buybacks effectively. So right now, 100% of all the incentives in the network flow towards BGT, and it will actually be sort of a 33% split flow towards people who are staking their BERA,” he noted. 

“It's somewhere between value redistribution and approachability of the asset as a whole. And I think that what that also means is that there are many more applications within the ecosystem that can now do everything — from stockpiling BERA for their treasuries, to sort of building yield loops around BERA to basically using that as the base asset.”

Berachain launched its mainnet earlier this year, and its token hit a $1 billion market cap. However, the BERA chart in the past three months is on a downtrend. 

In February, after the mainnet launch, Blockworks Research’s Boccaccio noted that “the market has evolved this cycle, moving away from complex DeFi and TVL-focused protocols in favor of trading functionality and fast chains.”

I asked Smokey about how Berachain in general fits into what crypto investors seemingly want at this point. 

“We're definitely seeing that the worlds of Web2 and Web3 are smashing together, whether that's Treasury vehicles or simply more sophisticated capital allocators looking at the space,” he noted. “I think as we increasingly look at blockchains as businesses, that's where what we've been focusing on with proof of liquidity becomes a little bit more interesting.”

For Berachain, it’s about finding how it can increase activity by properly investing its resources. 

“The chain itself is sort of generating revenue — slash generating real yields — from the applications building on top of it. The applications themselves are also effectively getting a money multiplier on what they're spending in that an application will typically say, ‘Okay, I'm willing to spend $1 worth of my token … in order to receive … emissions from the chain for the use case within my app that I'd like to support,’” Smokey said.

“And we think that gets really interesting when it comes to the ecosystem as a whole, because what it really means is that, at the end of the day, the chain is putting its money where its mouth is.”

Smokey sees the tokenomics upgrade as a “foundational” step towards ramping up network activity. 

He added that Berachain had a lot of hype going into launch, but faced a different landscape post-TGE now that we’re starting to see more attention paid to businesses that either generate revenue or have onchain sustainability. 

With fundamentals in play, Smokey added that Berachain plans to “double down on what we’re good at,” while also leaning into what the “market is currently validating.”

– Katherine Ross

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