Reward Vaults V2 - Cross Chain
Reward Vaults V2 allow protocols to participate in Proof of Liquidity without requiring a native deployment on Berachain.
Liquidity does not need to live on Berachain to be economically aligned with it. By allowing external protocols to participate through a standardized cross-chain vault system, PoL transforms from a local primitive into a cross-chain incentive engine.
Architecture
The system consists of two coordinated components:
External Reward Vault (ERV)
Deployed on an external chain, the ERV:
Accepts deposits of specified liquidity assets
Locks liquidity under enforced time commitments
Issues non-transferable receipt tokens representing locked positions
Liquidity remains on the external chain. The ERV exists purely to enforce capital commitment.
Berachain Reward Vault (BRV)
Deployed on Berachain, the BRV:
Accepts receipt tokens from the ERV
Is eligible for BGT emissions under standard PoL rules
Receives incentives and distributes rewards to stakers
From PoL's perspective, validators still direct emissions, incentives still determine competitiveness, and governance still controls eligibility. The only difference is what is being staked.
How It Works
Protocol deploys an ERV on their native chain
Users deposit liquidity into the ERV and receive receipt tokens
Receipt tokens are bridged and staked in the corresponding BRV on Berachain
The BRV competes for BGT emissions like any native vault
Rewards flow back to stakers
Economic Penalties for External Vaults
External Reward Vaults are economically disadvantaged by design.
Non-Native Fee Multiplier
ERVs pay the 1.33x non-native fee multiplier on all incentives. External protocols must pay proportionally higher to achieve the same emission routing as native vaults.
Reduced Fee Tier Points
ERVs earn fewer points under the fee tier system due to lower vault category multipliers, further reducing their competitiveness relative to native deployments.
This ensures:
Native Berachain protocols remain structurally advantaged
External participation is economically priced
Participation is permissioned by economics
Participation Requirements
External protocols must still:
Lock capital with enforced time commitments
Pay competitive incentives
Accept reduced efficiency relative to native vaults
Compete for validator attention
No new inflation paths are introduced. External liquidity is not subsidized simply for existing elsewhere.
Migration Path
If an external protocol later decides to deploy natively on Berachain:
They qualify for a standard Reward Vault
The non-native penalty is removed
Full fee tier benefits become available
Cross-chain participation serves as an onboarding funnel as protocols can test PoL economics before committing to full migration.
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