Berachain: A New Generation Public Chain Driven by Liquidity

Berachain was launched at the end of 2021. It is an EVM-compatible Layer 1 public chain focused on DeFi, built on the Cosmos SDK, and adopts the Liquidity Proof ( PoL ) consensus mechanism.

Development History

Berachain originated from the Bong Bears series of NFTs launched in August 2021. Subsequently, this NFT gave rise to new series such as Boo Bears, Baby Bears, Band Bears, and Bit Bears.

The core members of the Berachain team, after experiencing bull and bear markets, deeply understand the importance of Liquidity to DeFi and decided to design an L1 public chain that draws on the advantages of successful DeFi projects while avoiding their flaws. They designed the Liquidity Proof ( PoL ) mechanism, laying the foundation for Berachain's three-token model.

On November 28, 2023, Berachain will launch its internal testing. On January 11, 2024, the public test network "Artio" will officially go live. It is reported that more than 30 native protocols are under development, and several well-known protocols from other networks also plan to be deployed on Berachain.

It is rumored that Berachain will launch its mainnet in Q2 2024.

Financing Status

On April 20, 2023, Berachain secured $42 million in funding led by Polychain, with a valuation of $420 million. Participating institutions include Hack VC, OKX Ventures, and others.

Team Background

Berachain was created by an anonymous team, with co-founders including Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear. The recently joined Vice President of Engineering, Baloo the Bera, previously served as the Engineering Director at Mysten Labs. Most team members are early adopters who got involved in and invested in cryptocurrency around 2015, and they have a deep understanding of DeFi and public chain development. Although the team is anonymous, the significant funding they have received indicates that they possess rich connections and resources in the crypto space.

Mechanism Interpretation

Polaris EVM

Berachain is built on Polaris EVM, which is its EVM-based operating system for building on the Cosmos SDK. Polaris uses messaging to connect EVM and Cosmos SDK, separating block building, processing, and storage from execution. Polaris EVM also provides developers with the ability to create state precompiles and custom modules.

Advantages of using the Polaris EVM framework:

1. Developer-friendly for Ethereum, making it easier to attract developers from other EVM chains.
2. Achieve powerful cross-chain interoperability through IBC

PoL proof mechanism

The PoL mechanism introduces the liquidity of mainstream assets into Berachain to solve the liquidity problem. Its operation is as follows:

1. Users provide Liquidity to the BEX( Berachain native DEX) pool to obtain 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 delegator.

Advantages of PoL compared to PoS:

1. Incentivize Liquidity and Enhance Security
2. Inflation is more decentralized
3. Coordinate asset issuance agreements and validator relationships

Three Token Model

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

BGT: Governance token, non-transferable, can only be obtained by providing part of the assets as LP on BEX.

BERA: Gas Token, obtained through a 1:1 one-way burn of BGT or as a validation reward.

HONEY: Native over-collateralized USD stablecoin, serving as a distribution medium for protocol revenue.

Operation mode:

• Users provide Liquidity to earn BGT rewards
• Delegate BGT to validation nodes to earn BERA and HONEY

This model systematically constructs liquidity by separating governance tokens from Gas tokens. The only way to acquire BGT is to provide liquidity to BEX. This means that the staking support of Berachain allows for a more diverse range of assets, further stimulating liquidity.

Important Ecological Projects

the honey jar

the honey jar is the entry point of the Berachain ecosystem, responsible for user education, project incubation promotion, and collaboration matchmaking. It has launched the Honey Comb NFT, which holders can enjoy benefits from multiple projects.

Beradrome

The DEX and Restaking liquidity market on Berachain features ve(3,3) token economics, built-in bribery, voting mechanisms, and more. The "Tour de Berance" NFT series has been launched, and holders will enjoy rebase rights at the time of Berachain's launch.

Beradoge

The highly anticipated Meme project on Berachain features two NFT series, "Beradoge Gen 1" and "Mibidiots". Holders may receive BDOGE token airdrops.

Sudoswap

The full-chain NFT AMM Liquidity Market will deploy its protocol after launching on the Berachain mainnet. It is expected to support the bridging of blue-chip NFTs, bringing more NFT liquidity to Berachain.

Beramonium

The chain game project of Berachain has released the "Gemhunters" idle role-playing game. Players can obtain NFTs from other Berachain projects through the game.

Redacted Cartel

DeFi yield protocol, covering the bribery market trading and LSD liquidity staking fields. Plans to deploy new projects on Berachain, expected to leverage Berachain's built-in voting bribery mechanism.

Summary

Berachain separates gas and governance through its distinctive three-token economic model, maximizing the release of Liquidity. This design is expected to lead DeFi innovation, creating protocols with high Liquidity and high capital efficiency. As the user base grows and fee revenue increases, Berachain may attract more users and projects, forming a positive feedback loop.

However, the future development of Berachain still needs attention, including the progress of the project itself, the expansion of the ecosystem, and the security of the protocol. Investors should remain rational and closely monitor project dynamics.