Berachain: Innovative Liquidity Proof Public Chain

Berachain was launched at the end of 2021 as an EVM-compatible L1 focused on DeFi, built on the Cosmos SDK and utilizing a Liquidity Proof (PoL) consensus mechanism.

Development History

Berachain originates from the Bong Bears NFT series launched in August 2021. Subsequently, new collections such as Boo Bears, Baby Bears, Band Bears, and Bit Bears were derived.

After experiencing the ups and downs of the crypto market, the team members realized the importance of Liquidity for DeFi. They decided to design an L1 public chain, drawing on the advantages of successful DeFi projects while avoiding their flaws, leading to the birth of Berachain. The team innovatively proposed a Liquidity proof mechanism, laying the foundation for the three-token model.

In November 2023, Berachain launched its internal testing. On January 11, 2024, the public testnet "Artio" officially went live. It is reported that over 30 native protocols are under development, and several well-known protocols from other networks also plan to deploy on Berachain.

There are reports that the Berachain mainnet may go live in the second quarter of 2024.

Financing Status

In April 2023, Berachain raised $42 million in funding, led by Polychain, with participation from Hack VC, OKX Ventures, and other institutions, achieving a valuation of $420 million.

Team Background

Berachain was founded by an anonymous team, with core members including Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear. The recently joined Vice President of Engineering, Baloo the Bera, was previously the Engineering Lead at Mysten Labs.

Most team members are early participants in the cryptocurrency field, entering around 2015, and have a deep understanding of DeFi and public chain development. Although the team remains anonymous, their ability to secure significant funding indicates that they have rich connections and resources in the crypto space.

Core Mechanism Analysis

The original intention of Berachain's design is to solve the on-chain 流动性 problem. The team believes that a public chain that loses 流动性 will quickly become a "ghost town".

Polaris EVM

Berachain is built on Polaris EVM, which is an EVM-based operating system designed for building on the Cosmos SDK. Polaris connects EVM and Cosmos SDK through messaging, separating block construction, processing, and storage from execution. It also provides developers with state precompilation and custom module creation capabilities, helping to build more efficient and powerful smart contracts.

Advantages of Polaris EVM:

1. Developer-friendly for Ethereum, making it easier to attract developers from other EVM chains.
2. Supports IBC, with strong cross-chain interoperability, beneficial for liquidity inflow from other networks.

PoL Consensus Mechanism

The Proof of Liquidity (PoL) mechanism is key to Berachain's introduction of mainstream asset liquidity.

PoL mechanism operation process:

1. Users provide Liquidity to BEX (Berachain native DEX) and receive governance token BGT.
2. Users delegate BGT to validators, and validators generate blocks based on the delegation weight.
3. The client and the validator receive BERA and HONEY rewards from the chain.
4. Validators can vote on the inflation situation of BGT in any Liquidity pool.
5. The validator distributes bribes to the delegators.

Compared to PoS, the PoL mechanism has the following advantages:

1. Incentivize liquidity provision while enhancing security.
2. The token issuance is more decentralized, avoiding the concentration of rights.
3. Coordinate the relationship between asset issuance agreements and validators to promote collaboration.

Three Token Model

Berachain adopts a three-token model: BGT (governance token), BERA (Gas token), and HONEY (stablecoin).

• BGT: Non-transferable and can only be obtained by providing specific assets LP on BEX.
• BERA: Obtained through BGT 1:1 one-way burn, or distributed as verification rewards.
• HONEY: A native over-collateralized USD stablecoin, serving as a medium for protocol revenue distribution.

Operation mode:

• Users provide Liquidity on Berachain to earn BGT rewards.
• Delegate BGT to verification nodes to earn BERA and HONEY.

This design separates governance tokens from Gas tokens, allowing staking to support a more diverse range of assets, further stimulating Liquidity. The model incorporates experiences from multiple DeFi projects, drawing on Curve's decentralized governance and Terra's native stablecoin concept.

Important Ecological Projects

the honey jar

the honey jar is an important entry point for the Berachain ecosystem, responsible for user education, project incubation promotion, and collaboration matchmaking. The project has launched the Honey Comb NFT, and holders may receive benefits from multiple ecosystem projects, such as airdrops, whitelists, and APY enhancements.

Beradrome

Beradrome is the DEX and Restaking Liquidity Market on Berachain, utilizing ve(3,3) token economics. The "Tour de Berance" NFT series previously launched by the team will receive rebase benefits upon the launch of Berachain and may be eligible for airdrops of BERO or hiBERO tokens.

Beradoge

Beradoge (BDOGE) is a highly regarded Meme project on Berachain. It has two NFT series: "Beradoge Gen 1" and "Mibidiots". The project team states that holding these NFTs may yield BDOGE token rewards.

Sudoswap

Sudoswap is a full-chain NFT AMM Liquidity market, which has announced the deployment of its protocol after launching on the Berachain mainnet. It is expected to support cross-chain bridging for blue-chip NFTs and provide incentives.

Beramonium

Beramonium is a chain game project of Berachain that has launched a role-playing game called "Gemhunters." Players can have Beramium Genesis beras perform tasks to obtain gems, which can be exchanged for NFTs from other Berachain projects.

Redacted Cartel

Redacted Cartel is a DeFi yield protocol that covers bribery market trading and LSD liquidity staking. The project has announced that it will deploy a new project on Berachain, hoping to leverage Berachain's built-in voting bribery mechanism for advantage.

Summary

Berachain is committed to maximizing on-chain Liquidity through an innovative three-token economic model and PoL mechanism. This design is expected to lead DeFi innovation, creating an ecosystem with high liquidity and high capital efficiency.

As the user base grows and transaction fee revenue increases, Berachain may attract more users and projects, forming a positive growth flywheel. However, the project's actual performance still needs to focus on its future development, including aspects such as ecosystem expansion and protocol security.