Berachain's TVL Drops by 71% as Early Momentum Fades

Just months after its strong debut, Berachain, a DeFi-focused Layer 1 blockchain that launched in February, is facing major setbacks.

Berachain, a DeFi-focused Layer 1 blockchain that went live in February, is encountering major difficulties just months after its promising launch.

The network’s total value locked (TVL) has dropped sharply by 71%, decreasing from a peak of $3.5 billion to around $990 million, according to blockchain analytics firm Token Terminal. User activity and token value have also taken a hit.

After announcing its launch on February 6, Berachain quickly drew attention across the crypto space. The project’s token, which is named “bRachain” and trades under the ticker "RACH," 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, as seen on crypto analytics platform CoinGecko.

The decrease in active users and TVL might be linked to the reduction in early user incentives. During its launch phase, Berachain was quickly adding new features and relied heavily on rewards to bring in liquidity and activity. But since April, data shows a steady outflow of assets from the ecosystem.

The chain’s native token price, which is a key aspect of the Proof-of-Liquidity model, is also a factor. The model 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, leading to less user activity and further price decline.

The chain’s model also involves several different tokens and layers, which may discourage new users who are more comfortable with simpler DeFi platforms like Aave or Uniswap, despite their smaller TVLs.