Good afternoon everyone,
I hope most of you are busy building or traveling to SEA to connect with other builders at Token2049.
Today, I want to introduce a proposal to improve the current validator set and provide a practical path for active teams to stay competitive while securing long-term support to turn Berachain into a leading force in the blockchain space.
Capital inefficiency remains a major obstacle for Berachain. It limits scalability in both TVL growth and yield generation.
When Berachain launched in February 2025, several validators received BERA loans to become active participants in Proof of Liquidity. Their role was to secure the network by producing blocks and to accumulate boosts through BGT emissions. Boosts are a critical part of the system because they help regulate inflation within the ecosystem and refrain users from utilizing the BGT burn mechanism that allows users to convert BGT into BERA, reducing excess token supply and sustaining economic balance.
BGT boosts are valuable because they increase yield through the governance token earned from LP provision. By boosting validators, users gain access to a share of chain revenue paid by teams that want to incentivize their pools. The problem is that many validators are not using their BGT efficiently, which leads to lower overall yield and reduced TVL.
Looking at the current validator set of 62 active validators, with several inactive, it is clear that some allocate as little as one fifth or less of the BGT value to empty incentivized pools. This results in fewer blocks being solved, no BGT being distributed per proposal, and weak competition against validators that manage their boosts more strategically.
Here you can see Est. Return per BGT is $0.27
Here we have an active validator that cannot solve blocks because it lacks boosts. It also does not direct emissions toward incentivized pools, which results in a poor estimated return per BGT. There are many more cases like this, and these are only two examples.
Problem:
Several validators are allocating to pools without any clear or profitable strategy. The 250K BERA lent to these validators is essentially idle capital that could be generating real returns for the ecosystem. A strong and competitive validator set benefits everyone, and as competition increases, free float BGT proposals to unincentivized pools become less frequent, which improves the overall efficiency of the network.
The next problem is that several major pools on the native DEX have lost their BGT APR. At the beginning, the initial validator set was directing boosts toward the main BGT pools, which created strong APR across the board. Now many of these pools sit at almost zero APR because they are no longer incentivized. Users have moved their liquidity to platforms like Kodiak and Bulla. This shift is not inherently negative since BGT incentives can flow to other venues, but it highlights an imbalance in strategy.
Kodiak, for example, operates a profitable validator that allows them to occasionally rotate emissions toward unincentivized pools while still remaining competitive. In contrast, teams like Smilee or Roots rely on BeraHub, which has become a capital inefficient product managed by the Berachain Foundation. Smilee has the flexibility to adjust its approach and direct free float BGT toward its own BGT emitting vaults on BeraHub, giving them more control over incentives. Roots, on the other hand, depends entirely on the validator set to direct BGT toward unincentivized BGT emitting pools on BeraHub, leaving them at a disadvantage.
Solution:
As part of this proposal, I want to suggest important positive-EV changes to the current validator set by including teams that are actively building on Berachain.
At the moment, the validator set is holding idle capital and is not operating efficiently enough to stay competitive. There are teams in the ecosystem that do not currently run validators but would participate in BGT Wars and contribute to the network in a consistent and meaningful way over the long term.
Proposal:
a) Remove validators that are not competitive and have low BGT boost activity.
b) Reallocate validator positions to teams that are actively building on Berachain and are committed to contributing to the network long term.
c) Introduce a small commission that can be directed toward token buybacks or used as repayment for the opportunity to operate the validator (optional).
Use Case:
Roots, Arbera, Goldilocks, and Yeet are good examples of projects that could run their own validators and remain competitive within the broader ecosystem. Each of these teams could apply their own strategies to direct more BGT into their validators and optimize returns, unlike many current validators that show little interest in adjusting their approach and end up leaving value untapped.
Arbera could establish BGT emitting vaults, build its own wrapper, and channel the BGT it generates back into its validator to strengthen its position and increase profitability. Goldilocks could follow a similar model. Yeet/BakerDAO has already acquired Stride, which provides a strong flywheel that helps them accumulate additional BGT efficiently and positions them well to compete in the validator landscape.
All projects can adopt strategies similar to Kodiak and Infrared by rotating their validators between incentivized and unincentivized pools. This approach strengthens TVL and improves yield across the network.
Roots could apply this by supporting its own collateral asset, such as BYUSD, and directing incentives toward its unincentivized pool. This would increase the competitiveness and utility of the main token behind HONEY and reinforce its role within the broader DeFi ecosystem on Berachain.
In closing, I want to acknowledge that my perspective in this proposal is naturally biased, as I am a core contributor to Roots and view these changes through the lens of a team actively building on Berachain. However, the intention behind this proposal is not self-serving. It is to create a healthier, more competitive validator environment that supports teams that are genuinely contributing to the ecosystem.
This proposal gives builders a real opportunity to participate in the validator landscape, strengthen their strategies, and help Berachain grow in TVL, yield, and overall network activity. By reallocating resources to active participants, we can make the ecosystem more dynamic and efficient while staying true to the core principles of Proof of Liquidity.
Thank you for reading.