# About Berachain

Berachain went live with a completely new paradigm to incentivise liquidity on the chain through chain-level emissions for each pool deployed on Berachain baked in Berachain consensus mechanism

### How it works?

Proof-of-Liquidity (PoL) is an extension of Proof-of-Stake (PoS) that realigns economic incentives among validators, applications, and users. This is enabled through a two-token model - a token responsible for chain security (`$BERA`) and a token accountable for governance and rewards (`$BGT`)

<figure><img src="/files/samhTyTd2pWopNM3L8AS" alt=""><figcaption></figcaption></figure>

The main components in POL are:

1. **Validators**: Anyone who wants to be a validator has to stake `$BERA` and run the software on a VM that should be connected to the wider network. Validators are responsible for:
   1. Producing blocks and verifying transactions
   2. Redirecting BGT emissions to reward vaults
   3. Participating in governance
2. **Reward Vaults:** These are vaults that validators decide through governance to redirect `$BGT`  emissions to. The reward vaults incentivize certain actions, like staking of LP tokens.
3. **Protocols:** Protocols on Berachain incentivize their preferred user action by rewarding validators to emit `$BGT` to the reward vault participants. Most of these rewards earned by Validators are passed on to the vault users to incentivise them to deploy funds to their vaults. This also incentivises the delegation of new `$BGT`  emissions back to the validators
4. **Users**: Users deposit assets in whitelisted reward vaults to receive BGT emissions. These emissions can be redirected to validators so that they can generate more BGT emissions.

Berachain employs a unique three-token system:

* **BERA**: The native gas token used for transaction fees and staking by validators.&#x20;
  * The more `$BERA` a validator stakes, the more chances they get to propose a block.
* **BGT (Berachain Governance Token)**: A non-transferable token earned through liquidity provision, used for governance and staking.
  * The BGT emissions are directly proportional to the BGT emissions redirected to validators.
* **HONEY**: A stablecoin used within the ecosystem for trading and as a medium of exchange.


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