Berachain’s Year-End Crisis: From $3.3B TVL to $180M, Retail-First Strategy Turns Out to Be a VC Coin

Original Author: Maher, Foresight News

On January 14, BERA experienced a sudden spike, surging from $0.5 to $0.9, a rare occurrence amid its 12-week consecutive decline shown on weekly charts. That day, the Berachain Foundation released its 2025 year-end summary, emphasizing ecosystem expansion, technical optimization, and community engagement following mainnet launch, but also acknowledged the pressures from market volatility.

Following mainnet launch, Berachain experienced severe fluctuations in both TVL and token price. This may not simply be a market cycle effect, but rather a combined result of internal strategy and external pressures.

TVL Plummeted from $3.3B to $180M, Chain 24-Hour Revenue $84

In February 2025, Berachain officially launched mainnet, introducing an innovative PoL (Proof of Liquidity) consensus mechanism designed to incentivize applications and user participation through liquidity proofs rather than traditional Proof of Stake. This positioned Berachain as a Layer 1 chain specifically designed for DeFi applications, aimed at improving capital efficiency and user adoption. During the initial launch phase, the ecosystem expanded rapidly, attracting hundreds of dApps, including DEXs like BEX, lending protocols, and NFT marketplaces.

TVL once surged to $3.3 billion, with active addresses exceeding 140,000 and transaction volume reaching 9.59 million transactions. The foundation also supported multiple ecosystem projects through RFA (Request for Application) and RFC (Request for Comment) processes, and collaborated with institutions like BitGo to provide custody services, enhancing project professionalism. Additionally, Berachain’s community building and marketing strategies performed well in the early stages. The bear-themed NFT series (such as Bong Bears) attracted large numbers of users, and airdrop and incentive programs further stimulated participation. These initiatives helped Berachain become a hot spot in the DeFi sector during the first half of 2025, ranking as the sixth-largest DeFi chain.

However, as token prices continued to decline, according to DefiLlama data, its TVL has fallen to $180 million, with 24-hour chain revenue of $84, and the total amount of stablecoins on-chain at $153.5 million.

Retail-First? Token Majority Held by VCs, Major Unlock Coming in February

In its year-end update, the Berachain Foundation acknowledged that the crypto market’s “retail-first” strategy had overall poor results, leading to resource reallocation. This directly triggered a series of issues. First came layoffs and team changes. As part of strategic adjustments, the Berachain Foundation laid off most of its retail marketing team, shifting focus to core development. Berachain’s Chief Developer Alberto also announced his departure to co-found a Web2 company with former banking colleagues.

The foundation emphasized the departures were amicable, but this undoubtedly weakened the project’s core technical strength. Within the community, some developers have already moved to other chains like Monad, further exacerbating brain drain.

Perhaps the “retail-first” strategy promoted by the Berachain Foundation never truly launched.

The project initially emphasized community-driven development, but in actual execution, incentive mechanisms failed to continuously attract users, and token distribution left retail investors sidelined.

While the PoL mechanism is innovative, its complexity—such as the multi-token model including BERA and BGT—deterred users, resulting in sharp decline in network activity. In November 2025, the project suspended the network due to a Balancer protocol vulnerability, which fortunately did not affect user fund security.

BERA’s price has plummeted from its $9 peak to the current $0.7, and in just one year, the once-touted “king of public chains” token has lost over 90% of its value.

This collapse stems from the low circulation and high FDV (Fully Diluted Valuation) model, leading to artificial price inflation followed by rapid collapse, with roots in Berachain’s token allocation mechanism. Early contributors received 16.82% of total supply, private investors received an astounding 34.31% of token shares, making it a typical VC coin. Additionally, NFT holders could receive tens of millions of dollars in tokens, while testnet users received only $60 airdrops, sparking “wealth gap” controversies and marginalizing some loyal users.

This contradicts the “retail-first” slogan; the project is essentially a VC-dominated low-circulation, high-FDV model: early investors entered at $0.82, achieving 10-15x returns, while retail investors suffered the collapse. Foundation founder Smokey admitted that if given another chance, he wouldn’t sell so many tokens to VCs and has already repurchased some to reduce dilution. In October 2025, the Berachain Foundation partnered with Greenlane Holdings to launch BeraStrategy, using BERA as a reserve asset, but this barely stemmed the token’s decline.

Furthermore, VCs like Brevan Howard’s Nova fund hold redemption rights, allowing them to request full refunds of $25 million before February 2026, further highlighting Berachain’s tilt toward VCs.

Community dissatisfaction is running high, with many users calling it the “ultimate fraudulent L1.”

On February 6 this year, Berachain will unlock 63.75 million BERA, approximately 12.16% of total supply. Among the unlocked shares, private investors alone hold 28.58 million BERA. Starting from March this year, BERA unlocks 2.53% of total supply each month. Given current liquidity drought, continuous large unlocks this year may trigger massive selling pressure.