Berachain faces backlash over airdrop issues and insider trading concerns

Berachain, the much-anticipated layer-1 blockchain, is facing significant criticism after its mainnet launch on February 6.

The blockchain introduced a unique “Proof of Liquidity” model and one of the largest airdrops of the year.

Despite early excitement, concerns over its airdrop allocations, tokenomics, and potential insider trading have surfaced, resulting in a 63% price drop from its initial high.

Originating from the Bong Bears NFT collection, a cannabis-themed project launched in 2021, Berachain quickly gained attention when major exchanges such as Binance, MEXC, Upbit, and Bithumb listed its token, BERA.

Within days of the launch, Berachain’s total value locked (TVL) hit $3.1 billion, making it one of the most talked-about blockchain projects in recent months.

However, frustrations began to build as users who participated in Berachain’s testnet reported receiving far fewer BERA tokens than expected.

Analysts uncovered deeper issues within the token's structure, particularly concerning the staking mechanics, which critics argue benefit early investors disproportionately.

Berachain's blockchain is based on three tokens—BERA, BGT, and HONEY—each serving different roles within the ecosystem. Critics argue that the design of the system, where private investors hold over 35% of the total BERA supply, creates a potential conflict of interest.

These early investors can stake BERA, earn BGT, burn BGT to gain more BERA, and sell the additional tokens, thus creating a liquidity extraction mechanism that may harm retail investors.

One trader expressed frustration, saying, “Wait, so insiders can cycle through the token mechanics and dump on retail? This can’t be real.”

The controversy deepened when reports surfaced that “DevBear,” one of Berachain’s core developers, received 200,000 BERA from the airdrop and sold portions of the tokens shortly after launch. “

A co-founder selling tokens immediately after launch? That’s not a great look,” one observer remarked.

As concerns over insider trading and tokenomics grew, BERA’s price, which reached a high of $14.99 on February 6, plummeted 63% to $5.57 by February 11.

While volatility is not uncommon in newly launched tokens, the rapid price drop has raised questions about the sustainability of Berachain’s pre-launch hype and whether the token’s structure is more favorable to insiders than to retail participants.