Berachain Ecosystem Report 2025

Early Challenges After Initial Growth

The Launchy Team
May 23, 2025

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Berachain didn’t start like most blockchain projects. It began in 2021 with an NFT collection called Bong Bears, created by two pseudonymous founders, Smokey the Bera and Dev Bear.

Source: Flywheel DeFi

What began as a fun, community-driven experiment with rebasing NFTs slowly evolved into something more serious. Over time, the founders began to see a much bigger opportunity: to build a new kind of blockchain, one that solves some of the core issues in how value flows through proof-of-stake networks.

Most proof-of-stake blockchains operate with a rigid split between users, validators, and protocols. Validators provide network security by staking the native token and, in return, receive the majority of rewards. Protocols build services like lending or trading, but they don’t benefit from securing the chain.

Users, meanwhile, provide liquidity or interact with dApps, yet they mostly pay fees without getting meaningful upside. The result is a system where incentives are siloed, and the biggest share of value goes to validators, even though the health of the network also depends on liquidity and user activity.

Source: Berachain

Berachain aims to break down these walls with a new Proof of Liquidity model. Instead of separating economic activity from network security, it connects them. Liquidity provided by users is no longer just used for trading or lending; it also plays a role in helping secure the network.

Validators still stake BERA, Berachain’s native token, but their rewards are influenced by governance tokens (BGT) that can only be earned by users who supply liquidity. Those users can then delegate their BGT to validators, boosting validator rewards and giving users a voice in how the network runs. This creates a circular system where validators, users, and protocols depend on each other, and everyone has skin in the game.

As we review the first quarter of 2025, this report outlines Berachain’s development progress, ecosystem activity, and key milestones following its mainnet launch in February.

Key Takeaways:

Liquidity Stress Signals Growing Pains - Berachain experienced significant outflows in April 2025, with over $40M exiting the ecosystem and a steep decline in daily active users from 1.2M to under 100K.
TVL and Stablecoin Balances Drop Sharply - After peaking above $3B in total value locked, Berachain’s TVL fell below $2.5B. Stablecoin supply also halved from $1B to $500M, signaling reduced confidence.
Token Weakness Reflects Market Caution - $BERA’s price dropped over 65% from local highs, and its market cap declined nearly 60%, closely tracking declines in TVL and user activity.
Native Apps Still Building Amid Pullback - Despite broader ecosystem stress, native protocols like Infrared, Kodiak, and Beraborrow continue to lead in TVL and innovation. Meanwhile, emerging platforms like MadHoney and PuffPaw are exploring new verticals.

Berachain Network Overview

Berachain has entered a period of heightened stress, marked by significant liquidity outflows and a sharp drop in user activity. Over the past week, the network saw $40M exit its ecosystem, while daily active addresses fell from 1.2M to just 72,500 as of April 30, 2025.

This steep decline has shifted sentiment from bullish to cautious, raising questions about Berachain’s ability to retain capital and sustain engagement. The sell-off has also driven the protocol’s market cap down nearly 60% from its peak, signaling broader doubts about its near-term stability.

These outflows not only weaken the foundation for DeFi activity on the chain, but also put pressure on Berachain’s core innovation: the proof-of-liquidity (PoL) consensus model, which depends on continued user participation to secure the network. If these trends persist, the protocol may face deeper challenges in maintaining its competitive edge in the DeFi landscape.

Total Value Locked (TVL)

Source: DefiLlama

Berachain quickly attracted capital, with TVL rising sharply to over $2B within weeks of launch. It continued climbing to a peak above $3B in April, reflecting strong early adoption and enthusiasm around Berachain’s Proof-of-Liquidity model.

However, following the April peak, the trend began to shift. TVL has been gradually declining, dipping below $2.5B by early May.
While the current levels still reflect a relatively large amount of locked value, the pullback suggests that capital is starting to move out of the ecosystem.
This retreat could be early signs of cooling sentiment among liquidity providers.

DEX Volume

Source: DefiLlama

Activity was minimal in January, but volumes surged in February following the mainnet launch, surpassing $800M. March saw the highest trading activity, briefly crossing the $1B mark, signaling strong early interest from traders and liquidity providers.

However, volume began tapering off in April, despite another brief spike above $900M.
The slowdown became more pronounced heading into May, with DEX volume dropping to nearly $100M in the first week, a roughly 90% decline from the March peak.

This trend suggests a notable cooling in on-chain trading activity. Falling volume often reflects reduced user engagement and thinning liquidity, both of which can create slippage and worsen execution for remaining participants.

Daily Active User

Source: Dune / Hashed

Activity peaked sharply during the early days of mainnet launch, with DAU briefly surpassing 850,000. However, this initial surge proved unsustainable. By mid-February, daily usage had dropped significantly, falling below 100,000 and stabilizing at much lower levels through March and most of April.

A brief resurgence occurred around April 20, with DAU climbing again, but not close to the original peak.
Since then, the numbers have gradually declined, returning to a baseline of around 50,000 to 70,000 daily users.

This trend shows that while the launch attracted massive short-term attention, Berachain has struggled to retain user engagement over time. For a protocol whose security and incentives depend on continuous liquidity and user participation, declining DAU raises flags.

Stablecoin

Source: Dune / Hashed

Stablecoin deposits in Berachain ramped up quickly in February, reaching over $500M by mid-month. This upward trend continued, peaking in late March at around $1B in total stablecoin supply.

However, April marked a turning point. A steady outflow began shortly after the peak, with the total supply declining sharply.
By early May, stablecoin deposits had dropped to roughly half of their March high back to around $500M mark.

The outflows suggest waning user trust or capital rotation away from the Berachain ecosystem. For a protocol that depends on liquidity to secure its network through the Proof-of-Liquidity model, this retreat in stablecoin supply is a critical signal.

Throughout the entire period, USDC has been the dominant stablecoin by a wide margin. Its light blue bars consistently make up the majority of the stablecoin stack, particularly from February through late March when the total supply peaked near $1B. Even as stablecoin balances declined through April, USDC remained the backbone of on-chain liquidity.

Following USDC, Ethena’s USDe and PayPal’s BYU have been the next most prominent contributors, forming a smaller but noticeable portion of the total.
Other stablecoins like Avalon’s USDA and Reservoir show some growth over time but remain relatively minor players.
USDT, despite its dominance in other ecosystems, appears to have limited traction on Berachain.

The dominance of USDC suggests most DeFi activity on Berachain has depended on familiar, institution-grade collateral. But the recent decline in overall stablecoin supply, especially the outflow of USDC, reflects reduced capital confidence in the ecosystem.

Market Capitalization

Source: Artemis

After its mainnet launch in early February, Berachain’s $BERA experienced sharp fluctuations, with market cap climbing back above $900M in mid-March. However, starting in early April, the trend reversed. A steady decline followed, bringing the market cap down to approximately $338M by the end of the month, a drop of nearly 60% from its local peak.

This pattern reflects mounting pressure on the network, likely driven by capital flight and reduced user engagement. The downturn raises concerns about Berachain’s ability to maintain liquidity across its ecosystem, especially given that its Proof-of-Liquidity model relies on user deposits to secure the network. If these outflows continue, Berachain may struggle to keep its incentive structure functional and competitive against other DeFi protocols.

Token Price

Source: Artemis

Following the mainnet launch, the token experienced sharp volatility, with prices swinging between $6 and $9 through February and March. A short-lived rally in mid-March pushed the price close to $9 again, but this momentum faded quickly.

Beginning in early April, $BERA entered a steady downward trend.
By the end of the month, the token had dropped to approximately $2.80, marking a significant decline of more than 65% from its local highs.
The consistent drop aligns with declining market cap and TVL figures, suggesting broader weakness across the ecosystem.

The price action points to growing sell pressure and reduced demand, which may be linked to waning user confidence and liquidity exit. For a token that plays a critical role in securing the network through staking, a weakening price not only impacts validator incentives but also threatens the economic stability of Berachain’s Proof-of-Liquidity design. Continued price weakness could further strain participation across the chain.

Our Take

Berachain’s network has entered a phase of visible retracement following a strong launch and initial growth momentum. While its Proof-of-Liquidity (PoL) model helped attract capital and attention early on, recent data across multiple metrics points to a broad cooldown in activity, raising structural questions about sustainability and retention.

Capital is leaving the ecosystem. With over $40 million in outflows and TVL declining from a $3B peak in April to under $2.5B in early May, liquidity providers are reassessing risk. That’s been matched by a sharp drop in daily active users, from over 1.2M to just 72,500, signaling not just reduced speculative interest, but weakening engagement from core users.

DEX volumes tell a similar story: March exceeded $1B, but volume has since dropped roughly 90%, impacting both protocol revenues and liquidity conditions. Stablecoin balances also followed this decline, falling from $1B in late March to $500M, with outflows dominated by USDC. This contraction in stablecoins, Berachain’s base collateral. suggests users are pulling core liquidity, not just peripheral capital.

On-chain indicators are now converging with market sentiment. $BERA’s price fell over 65%, and the market cap dropped nearly 60%, showing clear risk-off behavior. This is especially important for a protocol that depends on token incentives to coordinate validators and liquidity participants.

The current downtrend doesn’t necessarily invalidate Berachain’s model, but it does highlight the fragility of early ecosystem dynamics when liquidity is heavily incentivized. The coming weeks will likely test whether PoL can adapt to lower participation levels or if deeper redesigns and re-incentivization strategies are needed to restore confidence.

Berachain Top 5 Native Projects Based on TVL

Infrared Finance

Infrared is a native protocol on Berachain that makes it easier for users to interact with the chain’s Proof-of-Liquidity (PoL) system. Instead of navigating complex staking flows, Infrared offers a simple way to stake BERA and BGT while still being able to use those assets across the ecosystem.

At its core, Infrared provides liquid staking products:

iBERA is the liquid version of BERA, letting users earn staking rewards while keeping their capital flexible. It currently offers a 4.89% APR.
iBGT is a liquid form of Berachain’s governance token, BGT. Staking through iBGT lets users maximize PoL rewards with an impressive 173.86% APR.

The platform also features yield vaults, which allow users to boost their returns further. Some vaults are offering up to 674.98% APR.

The protocol now holds $1.09B in TVL, accounting for over 40% of Berachain’s entire TVL, making it one of the most active and impactful projects on Berachain. By focusing on ease of use and strong incentives, Infrared is helping more users participate in PoL and grow the broader Berachain ecosystem.

Kodiak Finance

Kodiak is a native liquidity hub on Berachain that combines trading infrastructure, liquidity management tools, and token deployment into a single platform. With over $1B in TVL and more than 500,000 active users, Kodiak is the second largest project on Berachain.

The core of the platform is Kodiak DEX, a decentralized exchange offering both concentrated and full-range automated market makers (AMMs). This structure supports efficient trading execution and gives liquidity providers flexibility in how they allocate capital.

For users seeking passive strategies, Kodiak Islands offers automated vaults designed around Berachain’s PoL model.
These vaults are supported by Sweetened Islands, an integrated incentive layer that aims to sustain long-term liquidity by distributing PoL rewards.
Kodiak also includes Panda Factory, a permissionless, no-code token deployment tool.
It enables projects to launch new assets with custom bonding curves and integrated liquidity directly onto the Kodiak AMM, which is particularly suited for highly volatile or experimental tokens.

Beraborrow

Beraborrow is a native borrowing protocol on Berachain that lets users access liquidity without selling their assets. It issues $NECT, an over-collateralized stablecoin backed by Berachain-native assets. Beraborrow contributes $413.28B in TVL to the Berachain ecosystem.

Users deposit collateral such as iBGT, iBERA, LP tokens, and other Berachain-native assets into vaults called “Dens.” In return, they can mint $NECT, allowing them to retain exposure to their original holdings while unlocking liquidity to use across the ecosystem.

Key features include:

Instant Liquidity: Borrow $NECT against Berachain assets without selling. The process is simple and keeps users fully exposed to their collateral.
Automated Leverage: Users can access on-chain leverage via flash loans and recursive strategies, managed automatically through a slider interface.
Liquidation Yield: $NECT holders can stake into the Liquid Stability Pool to earn fees and profit from asset liquidations.
Auto-Compounding Dens: Collateral within Dens is automatically reinvested into iBGT, helping users grow their positions over time.
Tokenized Dens: These create new possibilities for governance and incentives, and can be deposited into Infrared vaults to continue earning rewards.
LP Positions as Collateral: Users can borrow against BEX and BERPS LP tokens while still earning yield from those positions.
Arbitrage Opportunities: The protocol allows for arbitrage between liquidated assets and market prices, offering additional ways to generate returns.

$NECT is the first stablecoin fully backed by assets native to Berachain. It is designed to be composable and flexible, giving users a way to participate in DeFi without having to exit their positions.

BEX

BEX is Berachain’s native decentralized exchange (DEX), built on a fork of Balancer V2. It supports token swaps and liquidity provision through both weighted and stable pools. Swaps are executed either directly (single-hop) or through multiple pools (multi-hop) to find the best pricing.

The platform features:

Weighted pools with custom ratios like 50/50 or 80/20
Stable pools designed for low-slippage trades between pegged assets

BEX is closely integrated with Berachain’s Proof-of-Liquidity system. Liquidity providers can earn $BGT rewards by depositing into pools linked to whitelisted reward vaults.

Default emissions are directed toward key pairs such as BERA-HONEY, BERA-WETH, and USDC-HONEY.

As of now, BEX holds $95.62M in TVL. A future upgrade to Balancer V3 is planned to address earlier security vulnerabilities and improve vault safety.

Beradrome

Beradrome is a native restaking and liquidity marketplace on Berachain that helps protocols build deeper liquidity at lower cost. With a total value locked (TVL) of $11.43M, it combines elements from Solidly and other DeFi systems while introducing its own token structure and incentive mechanisms.

The platform uses a three-token model:

BERO is Beradrome’s core token, issued via a bonding curve and always backed by at least 1 HONEY per BERO.
hiBERO is the governance token, earned by staking BERO. Unlike ve-models, hiBERO doesn’t require long lockups, staking lasts only during active voting periods.
oBERO acts as a call option on BERO and is distributed as an incentive to liquidity providers based on hiBERO voting.

Key features include:

Swap and Stake: Users can trade HONEY for BERO, stake BERO into hiBERO for voting and rewards, and borrow against hiBERO without liquidation risk.
Bribes and Gauge Voting: Protocols can bribe hiBERO holders to direct rewards toward specific liquidity pools.
Auto-Compounding and Yield Sharing: hiBERO earns fees from swaps, voting, and incentives including BGT (once whitelisted).
Token-owned Liquidity (ToL): Encourages sustainable liquidity by giving protocols control over LP positions.

Beradrome aims to improve flexibility, composability, and capital efficiency within Berachain’s ecosystem while removing long lockups and providing liquidation-free leverage through HONEY loans.

New Exciting Berachain Projects

MadHoney

MadHoney is a leverage-focused DeFi platform built natively on Berachain, designed for high-risk, high-reward trading and on-chain gaming. It combines derivatives, gamified betting, and community-driven culture into a single, chaotic hub aimed at degens and thrill-seeking traders.

Though still early in development, the branding and functionality position MadHoney as Berachain’s resident playground for speculative action.

The core features include:

MadPerps: A perpetuals trading platform that lets users place leveraged trades on freshly launched and existing Berachain-native tokens.
$MAD Machine: A jackpot-style on-chain game where users wager $1 worth of $MAD for a chance to win big. It functions like a slot machine, offering payouts in $MAD and reinforcing the token’s use case beyond trading.
$MAD Token: The ecosystem’s utility token, used for betting, leverage, and unlocking rewards within the MadHoney platform..
hi-risk leverage: Traders can go long or short on various Berachain tokens, even those with limited liquidity or that have just launched, amplifying volatility and potential gains (or losses).
NFT Collection – Mad Bears: A set of 4,444 genesis NFTs that act as VIP passes within the MadHoney ecosystem, providing early access and possible perks across products.

PuffPaw

Puffpaw is a unique quit-to-earn platform built on Berachain, using blockchain to help users reduce and eventually quit smoking or vaping. It’s the first of its kind to combine nicotine reduction with DePIN (Decentralized Physical Infrastructure Networks) and gamified incentives, offering a health-focused use case in Web3.

The platform raised $6M in a seed round led by Lemniscap, giving it strong momentum as it rolls out its model that rewards users for making healthier choices.

How Puffpaw Works:

Smart Vape Integration: Users pair their Puffpaw device with the Puffpaw app using a Puff Pass NFT. This connects the hardware to the blockchain and allows users to start earning based on their vaping behavior.
Gamified Quitting: The more users reduce their nicotine intake, the more rewards they earn. Progress is tracked and recorded on-chain, turning the quitting process into a challenge with measurable milestones.
Leasing & Borrowing Model: Non-smokers who hold a Puff Pass can lend their device to a friend who smokes. The borrower gets free access to vape hardware and pods, and both parties share the vape-to-earn rewards.
On-Chain Tracking: All activity is logged on-chain for transparency, giving users full, self-custodial control of their data. This also ensures accountability as users work through their quit journey.

Tierra.live

Tierra.live is a DAO launchpad built on Berachain that allows users to launch and manage tokenized investment funds. Each DAO begins with a seven-day fundraising phase, during which users contribute funds toward a target set by the DAO manager and the Tierra team.

If the goal is met, the DAO is created and issues one million tokens, distributed between contributors, the manager, liquidity provision, and Berachain’s Proof-of-Liquidity system.
Following this, the DAO enters an eight-week operational period where tokens become tradable on Kodiak using single-sided liquidity.
A 24-hour anti-sniping mechanism limits large initial purchases. DAOs can also enable optional liquidity mining through BGT rewards, pending governance approval.At the end of the cycle, token holders vote on whether to continue for another eight weeks or close the DAO.
If closed, the assets are redistributed among token holders.
The platform charges a 5% fee on contributions and a portion of trading fees, which are shared between the Tierra team and the DAO manager.

Latest Update

Boyco Claims Are Now Live

Berachain's Boyco claims are now live at boyco.berachain.com, where users can connect their wallet to view and claim available rewards.

While $BERA rewards can be claimed on the site, pre-pre deposit vaults and non-$BERA incentives must be claimed from the specific protocol or vault.

Boyco Rollover

Berachain recently introduced Boyco Rollover, a transition mechanism that turns pre-mainnet liquidity commitments into active participation in the network’s Proof-of-Liquidity system. Users who previously deposited into Boyco vaults can now claim their $BERA tokens and LP receipts, and immediately redeploy them into yield-generating strategies through a streamlined interface.

The Rollover UI provides tailored suggestions based on assets held, showing top vaults by APR and BGT capture rates.
With one click, users can convert and deposit into these vaults, no bridging or manual routing required. Options range from high-yield LP vaults to safer single-asset lending strategies.
For example, users can stake in iBERA/wBERA vaults, lend on platforms like Dolomite, or wrap assets into liquid staking tokens.

By rolling over, users begin earning BGT emissions right away, gain voting power for validators, and integrate deeper into Berachain’s DeFi ecosystem. The process upgrades them from passive pre-depositors to active protocol participants with full access to rewards and governance influence.

Final Thoughts

Berachain’s early trajectory reflects the familiar boom-and-cooldown cycle seen in many new L1 launches. The Proof-of-Liquidity (PoL) model generated strong early appeal by tightly aligning staking rewards with liquidity provisioning, helping Berachain secure over $3B in TVL and attract hundreds of thousands of users. But the recent drawdowns in capital, daily active users, and token price highlight a deeper issue: much of the early momentum was incentive-driven, and the network has yet to prove it can retain users without constant reward reinforcement.

The Boyco Rollover arrives at a critical moment. By converting idle pre-launch deposits into active PoL participation, it attempts to transition users from passive farmers into more engaged protocol stakeholders. The UX is streamlined and offers practical paths for redeployment, but it’s not yet clear if these mechanisms are compelling enough to reverse the broader downtrend. Yield opportunities remain high, but so does market volatility, and user trust appears shaken by recent capital flight.

The challenge ahead is structural. Berachain must show that it can support long-term utility beyond token emissions. That means building protocols with actual usage, not just reward farming. It also means proving that PoL can handle cyclical downturns without collapsing its core incentive loop. While some flagship apps like Infrared and Kodiak continue to hold substantial TVL, their sustainability depends on renewed engagement and the emergence of real demand for the products they support.

In short, Berachain now faces a proving phase. The early excitement has passed, and the coming months will determine whether its novel consensus model is a foundation for long-term value, or another case of temporary liquidity chasing short-term incentives.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.