Berachain knocks down rumors of refund to key investor

Berachain recently denied rumors that it issued a refund to one of its key investors. The chain’s team claimed the lead investor did not have a true option to back out of investing in BERA up to a year post its token launch. 

Berachain’s co-founder, pseudonymously known as Smokey the Bera, denied rumors that one of the lead investors was offered a backout option for up to a year after the launch of BERA. 

Smokey explained that the provision of the Nova investment vehicle was actually a protection in the case that Berachain never reached the TGE stage. The general conditions of the funding round were outlined in a term sheet, containing the parameters of the deal between Berachain and the Nova fund.

“Nova’s compliance team required a provision to guard for a scenario in which Berachain failed to TGE and get listed, and thus the LOCKED BERA purchased in the financing would not be an eligible investment via Nova’s liquid strategy,” explained Smokey on X. 

Berachain was one of the protocols to delay its mainnet and token for years, while also creating a strong community with a sense of expectation. In total, Berachain raised $142M in a multitude of rounds, led by Polychain Capital and some of the most prominent investment angels in crypto space. 

Berachain offered a $25M refund

According to recent investigations, Nova, backed by Brevan Howard Digital, worked in a clause that would protect the fund from exposure to the Berachain token for up to a year. Nova participated in a Series B round, providing $25M to Berachain. 

An additional side letter to the deal contained the refund conditions. For now, there are no signs of potential claims, despite the slide in BERA market prices. 

Berachain offered a refund option for the Nova Fund, outlined in a side letter. The option was valid until February 6, 2025. | Source: Berachain

The refund period extends until February 6, 2026, exactly a year following the Berachain TGE. According to the Berachain team, there is no danger that Nova, or Brevan Howard Digital, would ask for a refund. 

BERA trades near all-time lows

BERA tokens traded at $1.02, after briefly dipping below $1. BERA is down over 87% since its launch in February. The token is represented on Binance and other major centralized exchanges. 

After the initial hype locked in over $2.5B on Berachain, liquidity quickly flowed out. The network had limited DeFi apps, despite the initial ambitions of becoming a major hub for Web3 activity. As a result, total value locked sank to new lows of only around $250M, a loss of 90% of available liquidity.

The Berachain ecosystem is separate from other networks, though it was connected to other ecosystems. During the initial hype, $5B in liquidity flowed into Berachain, but around $4.9B returned to Ethereum.

In the past three months, $144.5M in liquidity flowed out of the chain. Despite the large-scale funding, Berachain serves around 21.9K daily active users. Critics noted Berachain did not show the expected signs of activity and was mostly abandoned by both developers and users.

The smartest crypto minds already read our newsletter. Want in? Join them.