How Does Beraborrow Work?
Beraborrow is a Liquity v1 fork on Berachain that launched on February 6, 2025 (Berachain mainnet day one) and reached $423M TVL within 8 days via its novel PoL auto-compounding mechanism. As Berachain's ecosystem TVL collapsed 97%+ from its March 2025 peak, Beraborrow's TVL fell to approximately $384K by May 2026 — a 99.9% decline. The protocol has no confirmed exploits, but the near-complete TVL collapse and minimal development activity represent severe exit liquidity risk for remaining depositors. The POLLEN governance token has a $135K market cap.
TVL
$364,000
Sector
CDP
Risk Grade
B-
Value Grade
D-
Core Mechanisms
Consensus / Proof-of-Liquidity Integration
NovelBerachain PoL auto-compound flywheel — BGT emissions reinvested into CDP collateral positions
Unique to Berachain's PoL mechanism. Validator BGT emissions directed to NECT liquidity gauges are auto-compounded back into user Dens (CDP positions), steadily improving collateralization ratios. No equivalent CDP integration exists on Ethereum or Solana. The mechanism collapses if validators redirect BGT emissions away from NECT pools.
CDP / Multi-Collateral Overcollateralized Stablecoin
Beraborrow Dens — multi-collateral CDP accepting iBGT, iBERA, BEX/Berps LPs, UNIBTC, SOLVBTC
Liquity v1 fork (licensed) adapted for multi-collateral. Mints NECT stablecoin against collateral deposited in Dens (Troves). Variable 0.5-5% annual borrowing fee vs. Liquity v1's one-time fee. Oracle switches from RedStone to Chronicle in December 2025.
CDP / Stability Pool
Liquid Stability Pool (LSP) — earns PoL-boosted rewards on liquidated collateral
Standard Liquity-style stability pool. LSP depositors earn liquidated collateral and POLLEN rewards. At near-zero protocol TVL, the stability pool is likely underfunded, meaning large liquidations may not be absorbed.
CDP / Hard Peg Redemption
NECT redemption for collateral at face value minus 0.5-5% dynamic fee
Standard Liquity redemption mechanism. Redemptions target the least-collateralized dens first. Provides a hard price floor but risks forcibly liquidating conservative users during high redemption periods.
Governance / Vote-Escrow Tokenomics
vePOLLEN — time-weighted locking (30/90/180/360 days) with 1.25x-3x multipliers
Standard veCRV-derived vote-escrow model. vePOLLEN holders receive 60% of weekly protocol fees and control VE treasury (BGT accumulation, iBGT-to-POLLEN swap facilitation). With $260K FDV, governance is trivially attackable.
Yield / Auto-Compounding Vault
PoL auto-compound vaults — reinvest BGT emissions into CDP position collateral
Standard auto-compounding vault pattern applied to Berachain PoL yield. BGT rewards from whitelisted gauges are claimed and reinvested to improve the vault owner's collateralization ratio.
Oracle / Price Feed
Chronicle + RedStone dual oracle setup (Chronicle primary from Dec 2025)
Switched from RedStone primary to Chronicle primary in December 2025. Chronicle is a newer, less battle-tested oracle network than Chainlink. Red Stone serves as backup. Both are less established than Chainlink at current Berachain TVL levels.
How the Pieces Interact
The PoL flywheel creates circular collateral dependency: iBGT collateral value partially reflects BGT emission yield. If validators redirect BGT emissions away from NECT liquidity gauges (due to lower incentive competition), the auto-compound yield disappears, iBGT price declines, and user dens approach unsafe collateral ratios simultaneously — creating a bank-run dynamic on the stability pool.
Berachain-native collateral assets (iBGT, BEX LP positions) are thinly traded. Chronicle and RedStone oracles for these assets have limited price history and may lag during high-volatility Berachain ecosystem events. During the 97%+ Berachain TVL collapse, oracle price feeds for iBGT and LP collateral may not have accurately reflected realizable liquidation values.
At near-zero TVL, the stability pool is likely inadequate to absorb large liquidations. If a large den is liquidated but the stability pool has insufficient NECT, the protocol must resort to redistribution of collateral and debt across remaining dens — forcing unwanted debt exposure on remaining users.
NECT depeg below $1 triggers redemption arbitrage targeting the least-collateralized dens. With thin stability pool and low overall collateral quality, redemptions could force liquidation of users who are technically collateralized but targeted by the redemption queue due to relative collateral ranking.
POLLEN market cap is $135K — governance control costs almost nothing. A minimal spend could acquire majority vePOLLEN and alter interest rate parameters, oracle configurations, or stability pool reward distributions in ways that harm remaining depositors.
What Could Go Wrong
- Near-zero protocol vitality: TVL collapsed from $423M at peak (February 14, 2025) to approximately $384K by May 2026 — a 99.9% decline. The GitHub presence is minimal with only one public repository last updated in April 2024. Remaining deposits face severe exit liquidity risk and protocol abandonment risk.
- Berachain ecosystem dependency: Beraborrow's PoL integration is wholly contingent on Berachain validator behavior directing BGT emissions to NECT liquidity gauges. As Berachain's total ecosystem TVL collapsed 97%+ from its March 2025 peak, BGT emission incentives for NECT pools dried up, collapsing the PoL flywheel that had driven Beraborrow's initial growth.
- Multi-collateral complexity with Berachain-native assets: Beraborrow accepts iBGT (liquid-staked BGT), LP positions from BEX and Berps, and BTC/ETH derivatives (UNIBTC, SOLVBTC, STONE) as collateral. These Berachain-specific assets have thin liquidity and high correlation — a broad Berachain sell-off can impair multiple collateral types simultaneously.
- NECT stability at near-zero TVL: the Liquid Stability Pool that absorbs liquidations requires depositors. With the protocol near-abandoned, the stability pool is likely underfunded, meaning NECT depeg events could go unchecked and hard-peg redemptions targeting undercollateralized dens could liquidate remaining users.
Exit Liquidity Failure as Protocol Approaches Abandonment
ElevatedTrigger: Total TVL falls below $100K as remaining depositors attempt to exit simultaneously, creating a NECT redemption race. With the stability pool underfunded, liquidations cannot be cleanly absorbed.
- 1.Remaining Beraborrow depositors observe near-zero protocol activity and move to close their dens — Multiple simultaneous NECT repayment and collateral withdrawal requests strain the thin liquidity in an already depleted market
- 2.Large simultaneous collateral withdrawals cause NECT to trade below $1 on secondary markets — NECT depeg activates redemption arbitrage: bots redeem NECT for collateral at the 0.5-5% fee, targeting the least-collateralized dens first
- 3.Redemptions force close dens of users who intended to remain, distributing their collateral to arbitrageurs — Users who were technically solvent but low in the collateralization ranking lose their positions without choosing to exit
- 4.With minimal stability pool TVL, any remaining liquidatable dens cascade their debt to other open dens via redistribution — Final remaining dens absorb redistributed debt proportional to their collateral — unwanted debt accrual traps users who cannot profitably exit
Risk Profile at a Glance
Overall: B- (35/100)
Lower score = safer