Summary

Berachain’s differentiation is not raw throughput; it is an L1 incentive system designed to route inflation toward applications and users. BERA remains the gas token and validator bond, while liquidity providers earn illiquid, soulbound BGT and delegate it to validators. BGT does not improve a validator’s odds of proposing a block, but it enlarges that validator’s reward and lets applications compete for emissions—the mechanism behind Smokey’s claim that users can “turn their liquidity into security.”
Proof of Liquidity creates a protocol-level market for application funding rather than another grants program. Validators direct emissions through gauges, while applications can offer token incentives—conventionally, “bribes”—for that flow; the intended result is lower-cost capital and liquidity than emitting large quantities of an app’s token in a traditional Pool 2. Smokey’s sharper point was that smart-contract activity can be gamed, whereas “social consensus and capital consensus” should decide incentive distribution.
The mechanism only removes friction; distribution remains the actual bottleneck. Smokey rejected the “if you build it, they will come” assumption: contact 100 teams, perhaps 10 are credible and one might become the next Uniswap or GMX. Berachain therefore pairs Proof of Liquidity with aggressive recruiting, an incubator serving five teams every six months, and a community deliberately built before the L1.
Berachain treats its absurd brand as acquisition infrastructure, not decoration. The project grew from 100 “completely useless bears smoking weed,” sold at 0.069 ETH into DeFi-native Discords, into several expanding NFT collections and a few thousand real users. The operating theory is that crypto protocols must be able to “execute while also being kind of silly”; Berachain chose its own path rather than trying to look like a conventional VC chain.
The technical pitch is an EVM-identical execution environment paired with CometBFT single-slot finality. Smokey said Ethereum clients such as Nethermind, Erigon and Reth can run the environment, allowing upstream EIPs and existing applications to arrive with less adaptation. He did not pitch an “ETH killer”: success means becoming the home and settlement layer for genuinely new applications that later may go multichain.
The proposed launch slate tests whether embedded liquidity produces better products, not merely better yields. Examples included Exponents’ incentivized long-versus-short markets, Shogun’s cross-chain intent execution and just-in-time liquidity, IVX’s zero-day options, Concrete Finance’s on-chain credit-default swaps and distressed debt, and PuffPaw’s token-rewarded nicotine reduction. Avi’s consumer analogy was pragmatic: users may accept a product “75% as good” as RuneScape if participation can also pay them, and Smokey agreed that these applications were interesting.
The trade is attractive only if Berachain concentrates activity rather than fragmenting it. Smokey estimated that most non-Ethereum chains—perhaps excluding Solana—can sustain only 10-15 heavily used applications, or 20 under an optimistic case. His launch priorities were correspondingly concrete: reach new users, attract enough capital that a chain called Proof of Liquidity actually has liquidity, and reward the builders and community that survived the pre-mainnet years.

Deep dive

1. Bong Bears found an L1 thesis inside a joke

Smokey and co-founder Papa came from healthcare startups and venture capital but had spent much of the preceding decade around crypto. DeFi Summer—Uniswap, Curve, Aave, Compound, Yearn and later the “DeFi 2.0” communities—gave them the raw material for a protocol thesis.
Their first product was intentionally the opposite of utility: 100 “completely useless bears smoking weed,” distributed through raffles at 0.069 ETH in heavily DeFi-oriented Discords. The buyers were “highly left-curved” enough to purchase the joke, yet unusually sharp and crypto-native.
Across four or five collections, existing holders could claim the next generation free while a small inflationary mint admitted newcomers. That rebase-like design turned a gag into a community of a few thousand actual users before anyone had committed to building an L1.
Conversations around an Olympus chain and protocol-owned liquidity exposed the deeper problem: someone with 32 ETH had to choose between securing a network and deploying productive capital. Lido and EigenLayer moved that trade-off in the right direction, but as opt-in solutions rather than a native default. Meanwhile, “ghost chains” held hundreds of millions, if not billions, in security while supporting almost no on-chain capital or activity.

2. Proof of Liquidity separates consensus security from reward weight

Smokey’s application-layer thesis was blunt: lower latency, higher TPS and better proving systems “don’t matter” if nobody builds applications. Payments and stablecoins are valid basics, but he argued that uniquely on-chain products are needed to pull users from Web2 into Web3.
BERA is the conventional gas token and validator bond. BGT, by contrast, is the “illiquid soulbound rewards-and-emissions token,” earned by supplying liquidity to approved venues—initially a DEX, a perpetuals vault and a stablecoin lending market, with governance able to approve other applications.
Every validator retains the same likelihood of proposing a block, according to Smokey; more delegated BGT instead produces a larger reward when its block arrives. His security answer to the hosts was that BERA remains at stake, while liquidity determines the economic weight of rewards rather than control of consensus.

3. Gauges and bribes turn block rewards into app financing

Each validator controls a gauge and can direct emissions across approved pools or smart contracts: all to one venue, split evenly, or weighted toward an options protocol. Smokey described this as “Curve at the chain level” from an emissions perspective.
A host’s NEAR comparison supplied the important pushback: NEAR once paid developers in proportion to smart-contract activity, yet its sophisticated infrastructure failed to attract the hoped-for applications. Smokey’s response was that activity metrics are gameable; “social consensus and capital consensus” should determine incentive distribution.
Applications can post incentives—“what one would think of most conventionally in DeFi as bribes”—offering their own tokens in exchange for BGT emissions. Validators take a commission, delegates share the incentive, and users choose validators according to their preferred risk and token exposure.
For the application, the proposed advantage is lower cost of capital. Instead of pairing its token in a Pool 2 and continuously dumping emissions into liquidity mining, it can spend a smaller quantity to compete for chain-level rewards that may become more valuable and useful over time.

4. Distribution requires a cult that can still ship

Smokey called mechanisms an enabling “base plate,” not a guarantee. His power-law funnel was blunt: approach 100 teams, perhaps 10 are half-decent and one might become a unicorn. “If you build it, no one will give a…” unless the chain actively explains why builders should care.
Avi compared Berachain’s combination of cultish community and credible technology to Chainlink. Smokey’s answer was effectively horseshoe theory: crypto’s left and right curves eventually meet, and a winning team must combine silliness with competence rather than build another polished VC chain.
The details carried the strategy: “bong-a-bear” came from a random Discord participant, while an April Fools rebrand to “bullet chain” for a day paired a running-of-the-bulls video with a claim of being a “perpendicular EVM L4 to Cardano.” Jonah’s counter was simply, “Why bears? Bears make prices go down.” Underneath the joke was deliberate positioning—Berachain could not win by presenting itself as another polished VC chain.

5. The bear market filtered teams and hardened community

Berachain’s community-first path inverted the usual professor-or-research-lab spinout. Users already cared before the chain existed, and building through 2022 created what Smokey called “trauma bonding”—closer to surviving fraternity hazing than acquiring users after a funded launch.
Pendle was his best specimen of bear-market opportunity: around late summer or early fall 2022, it was rebuilding its pricing models at roughly a $4-5 million market cap. Smokey thought the team was “cracked,” liked interest-rate derivatives, watched it kill the LST and points metas—and regretted not buying more.
The period also filtered for grit: “if you’re a grifter,” or mentally weak, there was a decent chance of quitting. Berachain closed its Series A about a week before FTX failed and was still receiving wires during the collapse; after finding FTX’s team unimpressive, Smokey joked, “we do not negotiate with terrorists.” Brevan Howard was the institutional name Smokey later cited when Avi asked who had invested.

6. EVM identity supports an application-first definition of success

Smokey resisted declaring victory: Berachain had “so much to prove” and could still mishandle many things. Technically, he placed it among the fastest and most efficient EVM-compatible L1 designs, while explicitly saying he was sure Monad was faster and noting that Sui and Sei had their own trade-offs.
His more defensible distinction was “the first completely EVM-identical L1.” Rather than maintain a separate Geth fork, Berachain could use execution clients including Nethermind, Erigon and Reth; Ethereum EIPs could be upstreamed, and applications or rollup infrastructure could move over without reinventing their execution environment.
CometBFT supplies single-slot finality, producing what Smokey called “the best of both worlds.” But success is not becoming an “ETH killer”; it is becoming the place users visit for novel applications with a real shot at product-market fit, and the home or settlement layer those products retain when they expand multichain.

7. The launch slate tests whether liquidity unlocks novel applications

Exponents was Smokey’s standout trading example: leveraged exposure to long-tail assets with a second incentive layer that can subsidize longs or shorts. In a matchup such as TRUMP versus BODEN, communities could explicitly pay traders to long one coin and short the other rather than merely incentivize passive LPs.
That design becomes a “yield sandwich” on Berachain: spot-arbitrage-based pricing and leveraged fees, plus directional incentives, plus Proof of Liquidity emissions. The bet is that capital velocity and competing reward layers create a product unavailable from a standard perpetuals venue.
Shogun aims to route trades between assets on different chains without making users leave their home network. Its intent-and-solver system combines just-in-time liquidity vaults with an attempt to turn MEV into “trader-extractable value” returned to the user through better execution.
The remaining DeFi slate ranged from IVX’s zero-day-to-expiry options to Concrete Finance’s credit-default swaps and distressed debt. Smokey highlighted Concrete’s founder—a surgeon trained at Oxford, former Two Sigma VP and on-chain “degen”—as the unusual combination of institutional expertise and crypto-native behavior he wanted.

8. Builder support extends from incubation to culture and L2s

PuffPaw, or “vape to earn,” was the clearest consumer example. Its team had shipped 75 million vapes to leading tobacco and vape manufacturers, partnered with some of the largest quit-smoking applications, and built a DePIN device that rewards users for progressively reducing nicotine until reaching green-tea extract—“quit smoking to earn,” not another purely financial loop.
Avi framed tokens as tools for financializing existing behavior: if an on-chain RuneScape were only “75% as good” but paid users, some might prefer it. Smokey agreed that such applications were cool and argued that Proof of Liquidity could support games, NFTs and social products because nearly everything in crypto eventually touches a liquidity system.
Other experiments ranged from AI bear reporters that could become a bid-based content-distribution network to GummiFi’s order-book-style borrowing against almost any asset. Consumer, gaming and media teams were also building L2s that would roll up to Berachain while developing their own “similar-but-different” cultures.
Before mainnet, Proof of Liquidity gave recruiting a tangible promise: applications could become part of block-reward distribution instead of receiving a grant and being asked to stay. The arm’s-length Build-a-Bera incubator works with five teams every six months on fundraising, tokenomics, go-to-market, legal, taxes and organizational scaling.

9. User compounding is the trade, but usable ecosystems stay small

A host proposed branding Berachain as the chain where token earners are not rugged by disappearing liquidity pools. Smokey refined the claim: the core flow is “validators to apps and apps to users,” with the majority of generated value intentionally pushed toward applications and their customers.
His user shorthand was “have your steak and eat it too.” Someone can LP as usual, earn the application’s normal return plus BGT, then delegate BGT to a validator rewarding that same pool for compounding—or choose one receiving incentives from another protocol as a long-tail call option.
The hosts’ enthusiasm came partly from fatigue: one had done less on-chain during the previous 18 months than in a single month of 2021. Smokey agreed that novelty was scarce, but warned that most non-Ethereum chains can support only 10-15 genuinely used apps, perhaps 20 optimistically, before liquidity fragments; like the English Premier League, the leading cohort must rotate without collapsing.
Berachain’s launch test was therefore narrower than “more infrastructure.” Smokey named three goals: bring in new users, ensure a chain called Proof of Liquidity launches with substantial capital, and “do right by” the builders and community that stayed through the preceding years. “Future finance is good vibes,” but it still has to ship.

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