Just days after its mainnet launch and airdrop, the Berachain community is concerned about the project’s visible favoritism toward private investors. There are also allegations about the network’s lead developer swapping large amounts of airdropped BERA tokens.
Despite this, however, Berachain does have a chance to rebuild public trust. If its Proof of Liquidity system gets implemented and becomes operational, it would be a truly novel project.
Questionable Decisions from Berachain Developers
Berachain, the new layer-1 blockchain network, has created notable engagement in the crypto space due to its airdrop and mainnet launch last week. Although the firm has a clear vision to become a novel network with its unique ‘Proof of Liquidity’ mechanism, its marketing and hype are evocative of meme coin culture.
Its pre-launch liquidity platform attracted $2.3 billion in deposits. Berachain also started one of the biggest airdrops this year with its mainnet launch on February 6. Its BERA token also received Binance listing immediately after TGE, along with other major exchanges.
However, trouble has been brewing. When the airdrop happened, users complained that testnet farmers got minuscule BERA token rewards.
Berachain’s blockchain is designed as a self-contained system of three tokens: BERA, BGT, and HONEY, which serve different functions. However, by staking and burning different tokens, users can exploit the system.
“Wait, so all the huge insiders of Berachain, with locked BERA tokens, can stake the BERA, receive BGT, burn the BGT for BERA and then dump? Please tell me this isn’t true. It’s almost criminal,” one user wrote after the BERA tokenomics were revealed last week.
Ericonomic, an observer of Berachain’s blockchain ecosystem, compiled a thread of pressing concerns. Essentially, more than 35% of the BERA token supply went to private investors, and its inflation is much higher than most projects.
Also, private investors can stake BERA to earn liquid rewards that they can easily dump. There are also concerns about one potential core developer dumping his BERA tokens.
“A cofounder [DevBear] is selling tokens from one of his doxxed addresses. He got around 200,000 BERA from the airdrop (this is a really bad thing since he, or the core, designed the airdrop) and then he swapped some of those tokens for WBTC, ETH, BYUSD, etc,” Ericonomic claimed.
Berachain developers didn’t reveal the nature of their blockchain’s staking scheme until recently. Additionally, although they claim that Berachain’s core product will be Proof of Liquidity, this hasn’t materialized yet.
So, all of these factors do make BERA’s long-term sustainability questionable. It might end up being as extremely volatile as non-utility meme coins.
“I’ve always seen Berachain as a breath of fresh air in a place full of scams, something with its own culture and good morals, and I’m not gonna lie—seeing this ‘bad’ launch and the ‘shady’ stuff makes me feel kinda sad. But the end, if the builders keep working as they have for the last few years, Berachain will succeed and become the best place to yield by far,” Ericonomic wrote.
BERA Token Continues to Struggle
As soon as the airdrop took place, BERA’s price began dropping like a rock. It fell over 50% from its intra-day peak post-airdrop, and it continued to struggle the next day.
Ostensibly, Berachain is attempting a novel type of blockchain project, but community confidence has been shaken, and that crisis has been reflected in its valuation.
Berachain (BERA) Price Performance. Source: BeInCrypto
Still, even despite these alarming trends, community members are not totally bearish in their predictions. There is still a lot of optimism around the Proof of Liquidity (PoL) mechanism. The network has significant developer support.
So, if PoL is implemented and the dev community remains committed to leveraging the novel architecture, Berachain could likely overcome these challenges in the long-term.
