Berachain, a DeFi-focused Layer 1 blockchain that launched in February, is facing major setbacks just months after its strong debut.
The network’s total value locked (TVL) has dropped sharply by 71%, falling from a peak of $3.5 billion to around $990 million, while user activity and token value have also taken a hit.
When Berachain went live on February 6, it drew major attention across the crypto space. The project’s token launched with a $900 million market cap, and the chain quickly attracted billions in user deposits. Its token price also soared to $8.60 on day one. However, this early momentum has not lasted. The token now trades at $2.40, a 72% drop, and active users have decreased from over 2.2 million in its first two months to just 330,000 today.
Incentives Wore Off, Users Left
One of the key reasons for the decline appears to be the fading of early user incentives. During its launch phase, Berachain relied heavily on rewards to bring in liquidity and activity. But since April, data shows a steady outflow of assets from the ecosystem. Without strong incentives, many users have moved their funds elsewhere.
A Complicated System That May Be Too Complex
Berachain operates on a unique Proof-of-Liquidity model, which depends on a flywheel effect — token price, staking, and liquidity all influence each other. But as the token value drops, the system becomes less attractive. The model also involves several different tokens and layers, which may discourage new users who are more comfortable with simpler DeFi platforms.