What Is Infrared Finance? A Complete Guide to PoL Vaults, iBGT, and Berachain Liquidity

What Is Infrared Finance?

Infrared Finance is a DeFi infrastructure protocol designed specifically for the Berachain ecosystem. Its primary goal is to simplify participation in Berachain’s Proof of Liquidity (PoL) mechanism while preserving asset liquidity for users.

Instead of forcing users to lock assets or governance rewards in illiquid positions, Infrared introduces liquid staking–style derivatives that allow capital to remain usable across DeFi. This design makes Infrared a key middleware layer between Berachain validators, liquidity providers, and DeFi applications.

At its core, Infrared helps users convert complex PoL participation into a simple vault-based experience.

Understanding Proof of Liquidity (PoL) on Berachain

Proof of Liquidity is a novel mechanism introduced by Berachain. Unlike traditional Proof of Stake systems, PoL rewards users for supplying liquidity rather than simply locking tokens.

In PoL:

• Liquidity providers contribute assets to approved pools

• Liquidity directly supports network security and ecosystem growth

• Rewards are distributed in BGT (Berachain Governance Token)

However, native BGT is non-transferable, which limits its usability in DeFi. This is where Infrared Finance plays a crucial role.

How Infrared PoL Vaults Work

Infrared PoL Vaults act as aggregation layers for Berachain liquidity. Instead of managing liquidity positions manually, users deposit assets into Infrared vaults.

The process is simple:

• Users deposit supported assets into a PoL vault

• Infrared manages liquidity placement and PoL participation

• Users receive liquid representations of their position

• Rewards are accumulated automatically

By abstracting away complexity, Infrared makes PoL accessible to both advanced DeFi users and newcomers.

iBGT and iBERA Explained

What Is iBGT?

iBGT is a liquid representation of BGT earned through Infrared-managed PoL vaults. Since native BGT cannot be freely transferred, iBGT serves as its liquid counterpart.

Key characteristics of iBGT:

• Represents exposure to PoL rewards

• Can be transferred, traded, or used in DeFi

• Maintains economic linkage to underlying BGT rewards

This unlocks a new layer of capital efficiency for Berachain participants.

What Is iBERA?

iBERA follows a similar concept but applies to BERA, the native token of Berachain. Through Infrared, staked or utilized BERA can be converted into a liquid asset that remains usable across DeFi protocols.

Together, iBGT and iBERA form the foundation of Infrared’s liquid staking and liquidity strategy.

Infrared Finance TVL, Yields, and Market Data

As of recent data, Infrared Finance has attracted close to $190 million in Total Value Locked (TVL) across its PoL vaults. This positions Infrared as one of the largest liquidity infrastructures in the Berachain ecosystem.

Some PoL vaults display high Annual Percentage Rates (APR), particularly those involving BERA-based liquidity pairs. In certain cases, displayed APRs exceed 70%–80%, reflecting both incentive emissions and ecosystem growth dynamics.

Meanwhile, iBGT trades as a market-priced asset, reflecting both PoL reward expectations and market sentiment toward Berachain. While iBGT has experienced significant volatility compared to earlier valuation peaks, many users view it as a long-term ecosystem exposure rather than a short-term trading instrument.

Why Infrared Finance Is Gaining Attention

Several factors contribute to Infrared’s growing visibility:

1. Capital Efficiency
Infrared allows users to earn PoL rewards without sacrificing liquidity. This is a major advantage over traditional staking or locked governance systems.

2. Ecosystem Importance
As Berachain expands, liquidity becomes increasingly critical. Infrared sits at the center of this process, supplying structured liquidity to the network.

3. User Experience
Vault-based design significantly reduces complexity, making advanced mechanisms accessible to a wider audience.

4. DeFi Composability
Liquid assets like iBGT and iBERA can be integrated into lending, trading, and yield strategies across the ecosystem.

Risks and Considerations

Despite its advantages, Infrared Finance is not risk-free.

Key risks include:

• Smart contract risk, common to all DeFi protocols

• Token price volatility, particularly for iBGT

• Liquidity pool impermanent loss, depending on vault composition

• Ecosystem dependency, as Infrared’s success is closely tied to Berachain adoption

Users should carefully evaluate vault parameters and avoid overexposure to high-risk pools.

Who Is Infrared Finance For?

Infrared Finance may be suitable for:

• DeFi users seeking yield with liquidity flexibility

• Long-term believers in the Berachain ecosystem

• Users interested in liquid staking alternatives

• Liquidity providers looking for simplified PoL exposure

It may be less suitable for users with very low risk tolerance or those unfamiliar with DeFi mechanics.

Conclusion

Infrared Finance represents a critical piece of Berachain’s emerging DeFi infrastructure. By transforming Proof of Liquidity into a liquid, vault-based experience, Infrared enables users to earn rewards while keeping capital flexible and productive.

With growing TVL, innovative liquid assets like iBGT and iBERA, and deep integration into Berachain’s PoL model, Infrared Finance is positioning itself as a foundational protocol in the ecosystem. As with all DeFi opportunities, understanding the mechanics and risks is essential—but for many users, Infrared offers a compelling balance between yield, liquidity, and usability.