Berachain TVL Elevated Past $3.2 Billion, Ahead of Base and Arbitrum

Tags: on-chain, tvl

Key Takeaways:

• Berachain’s total value locked (TVL) has surged significantly, and it is now ranked 6th in the DeFi ecosystem.
• It boasts a novel Proof-of-Liquidity consensus that is attracting huge investment.
• This milestone signals a shift in the DeFi market, posing serious competition to existing players.

Layer-1 blockchain Berachain is in the midst of an impressive rally pushing its total value locked (TVL) well over $3.26 billion. According to data from DeFi tracker DefiLlama, this catapults Berachain into the top six largest blockchain networks by decentralized finance (DeFi) volume, above established second layer networks like Arbitrum and Base This raises the question: Is Berachain set to become a DeFi juggernaut?

As of February 24, Berachain’s TVL not only exceeded Arbitrum ($2.9 billion TVL) and Base ($3.24 billion TVL). It alone accounts for 2.98% of the total value locked across the entire DeFi space. As of this writing, the Berachain (BERA) token was trading at $6.75 per BERA with a market cap of $715 million and a fully diluted market cap (FDV) of $3.3 billion. These numbers illustrate a project gaining traction and confidence from investors very quickly.

TVL Explained: The Heartbeat of DeFi

Total Value Locked (TVL) is a key measure of health for DeFi projects. It tracks the total amount of all crypto assets locked in a project’s smart contracts. At its core, it’s a measure of capital at work on a given platform.

TVL could be a positive indicator as a higher TVL lets the ecosystem provide more liquidity to the users which could lead to better platform standards and utility This means more users are willing to hold their assets on the network, which suggests a greater yield-generating potential in the ecosystem. On the flip side, lower TVLs could be considered a warning sign, as this may imply less available capital and potentially less return for DeFi users.

The surge in TVL for Berachain is more than a statistic; it reflects an increasing trust in the technology behind it and its potential to draw substantial capital allocation.

The Rise of Berachain: Why it is Leaving the Rest in its Dust

Surpassing the $3.26 billion TVL mark indicates that Berachain has decisively surpassed networks such as Arbitrum and Base, which have achieved phenomenal success on the DeFi front. It reflects the growing attractiveness of the value proposition provided by Berachain and an increasing number of users.

Berachain’s TVL

Who Are the Major Contributors To Growth On Berachain?

At present, liquid staking protocol Infrared Finance, which has a TVL of $1.52 billion, is spearheading its development on Berachain. Near the top is decentralized exchange (DEX) Kodiak with $1.12 billion, closely followed by yield farming protocol Concrete that commands some $800 million. These early successes highlight Berachain’s growing adoption across various DeFi applications.

Ethereum Still Dominates DeFi, But the Landscape Is Changing

Although Berachain’s success is impressive, it’s critical to perspective in the larger scene of DeFi. Ethereum continues to dominate, boasting an impressive TVL of $58 billion, or 53.4% of the overall DeFi market. Solana holds the second place with $8 billion of assets locked and collects 7.45% market share. While Berachain has come a long way, dethroning incumbents in the DeFi race will not come overnight.

Ethereum continues to dominate DeFi ($58 billion TVL)

Berachain — Reading The “Honey” In Berachain!

At the heart of Berachain’s allure is its Proof-of-Liquidity (PoL) consensus mechanism. It also uses this novel approach to establish an easy and incentivized relationship with the actors allowing various participants to benefit from an efficient and high-performing blockchain.

In a previous interview, Vance Spencer of Framework Ventures, one of Berachain’s largest backers, had stressed on the game-changing potential of this mechanism. Based on these factors, Spencer proposed that Berachain’s token might become a serious competitor to Ether on the basis of its unique incentives being aligned.

“When you stake BERA,” he explained, “you have to direct the liquidity you receive to those primitives. And so all the fees remain in the ecosystem.” This will create a closed-loop system, directing liquidity to the key infrastructure and applications and accruing fees to provide economic incentive for participation.

The beauty of the community: The $632 million airdrop

On February 6, the Bera Foundation held a massive airdrop, targeting eligible users with 80 million BERA tokens. With an estimated value of $632 million, this saw one of the largest airdrops in crypto history. To say that the impact was instant is an understatement – a ton of interest was generated, leading to rising awareness and adoption of the Berachain platform. It was a marketing coup, pouring excitement and money into the ecosystem.

Berachain Unpacked: Does it Live Up to the Hype?

With such a high TVL in such a short time frame, as well as their novel Proof-of-Liquidity consensus mechanism, Berachain has the potential to change the game in DeFi. But potential has to convert to sustainable activity.

Berachain: Key features to differentiate from the rest

The time is coming for Berachain to show their pioneering strengths in order to dominate both developers and users in the world of DeFi. Berachain has carved a distinct niche in several areas:

• Incentive Alignment: This creates a closely-knit ecosystem that drives stakers, validators, and dApp developers in the same direction of network growth.
• EVM Compatibility: EVM compatibility enables developers to switch their existing decentralized applications to Berachain with relative ease, lowering the potential barrier to entry.
• Cosmos SDK Foundation: By being built on the Cosmos SDK, Berachain receives a modular and scalable architecture that can adapt to the growth of the changing DeFi ecosystem.

The Road Ahead: Challenges and Opportunities

Despite Berachain’s rapid momentum, it doesn’t come without plenty to prove if it’s to become a DeFi powerhouse:

• Competition: The DeFi sector is highly competitive, with many incumbent platforms competing for market share. Berachain has to keep inventing and doing things differently to be set apart from the noise.
• Security: Security is a crucial concern in DeFi, as any breaches in Berachain’s contracts could erode user trust and result in massive losses. Audits and continous monitoring are also critical.
• Scalability: Berachain needs to ensure it can manage more transaction volumes as the network accelerates without losing speed or cost-effectiveness.

Despite these challenges, Berachain also has many opportunities to leverage on its strengths and catalyze its growth:

• Expanding the Ecosystem: By attracting more developers and dApps, Berachain can foster a more vibrant ecosystem, which in turn attracts more users and capital.
• Strategic Partnerships: Berachain can achieve greater adoption and reach by forming key partnerships with other blockchain projects and traditional financial institutions.
• Application: Building and launching new DeFi applications and features aligns with this by keeping Berachain at the forefront of the industry and attracting users looking for the latest and greatest.

A Broader Market Perspective

Berachain’s rise is happening within a rapidly evolving DeFi landscape. On-chain fees increased for USDC according to data from Circle. It further depicts that L2 platforms are gaining incrementally so, as the mainnet fees fall.

The recent rise of Berachain shows that the network is poised to become a major player in the DeFi ecosystem.