Similar to the well-known Proof-of-Stake (PoS) system, PoL also secures the network through an initial commitment of the native gas token. However, PoL takes this further by introducing a soulbound governance token. This unique token not only influences the reward potential for stakers, based on delegation from other users, but it also serves as a reward for those contributing liquidity to the network via governed reward vaults.

The Proof-of-Liquidity Flywheel

By separating the roles of tokens for gas and security from those used for governing chain rewards, PoL creates a more streamlined and efficient system.

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