Exploring the Mining Strategy of the Berachain Ecosystem

The recent macroeconomic environment still has many uncertainties, and the launch of Bitcoin spot ETFs has also made it a focal point of traditional finance. This means that the price trend of Bitcoin is more influenced by macroeconomic factors.

The market has been oscillating in the range of 82000-88000 for two months, and the secondary market altcoins lack new narratives, while the primary market is also lacking continuity. In this situation, apart from maintaining a wait-and-see attitude, using high-quality coins and stablecoins in Mining to obtain passive income is also a good choice.

Berachain, as a public chain with a built-in DeFi mechanism, has recently launched the PoL (Proof of Liquidity) mechanism, with some project yields even exceeding 100% APY. Let’s learn about the mining opportunities on Berachain.

The Flywheel Effect of the PoL Mechanism

1. Users provide liquidity: Deposit assets into the dApp's liquidity pool, receive receipt tokens and stake them to earn BGT, providing initial liquidity for the ecosystem.

2. Validator Allocation: According to the incentives provided by the dApp, guide the BGT emissions to the reward pool with the highest returns. As more BGT flows into the popular pools, user yield increases, further attracting more users to participate.

3. dApp Competition: To attract BGT emissions, dApps enhance incentive measures and deepen liquidity.

4. User Delegation: Users can delegate their earned BGT to outstanding validators to enhance their block proposal weight, thereby obtaining more sharing rewards, which encourages validators to continuously optimize their BGT distribution strategies, creating a virtuous cycle.

5. Ecological Expansion: With the increase in liquidity and user participation, trading volume and dApp usage rise, the network value increases, attracting more users and developers to join, accelerating the flywheel operation.

This mechanism establishes a collaborative relationship among dApps, users, and validators, addressing the issues of insufficient liquidity and uneven asset distribution in traditional PoS.

Mining Strategy

1. Stable layout: core blue chips/LSD as the main focus

Core idea: Choose a relatively core, deep, and moderately volatile asset portfolio on Berachain, such as:

• WBERA / LSD (such as iBERA, stBGT, beraETH, etc.)
• WETH / LSD (weETH, ezETH, beraETH, etc.)
• WBTC / Stablecoin

Advantages:

• Reduce the risk of severe price fluctuations.
• Enjoy better liquidity depth
• Multiple rewards can be obtained simultaneously

Potential sources of income:

• Liquidity Mining (LP Rewards + PoL Rewards)
• Built-in earnings of LSD
• Protocol Bribe Profit Sharing

Risks and Precautions:

• The issue of premium and discount between LSD tokens
• Validator's commission and profit-sharing system
• The balance between capital volume and return cost

2. Low Volatility Strategy: Stablecoin/Stablecoin Pairing

Core idea: Choose stablecoin pairs for stablecoin pools, such as USDa/sUSDa, rUSD/HONEY, etc., to reduce impermanent loss risk.

Potential sources of income:

• PoL Incentives (BGT Emission + Protocol Bribe)
• Transaction fee income
• Additional rewards or airdrops for parties

Risks and Precautions:

• The credit risk of the stablecoin itself
• Relatively low APR
• The instability of bribery incentives

3. High-risk short-term strategy: Meme coins/emerging token pools

Core idea: Choose newly launched or highly topical Meme coins/emerging tokens and their trading pairs with mainstream tokens to earn high APR in the short term.

Potential sources of income:

• PoL rewards
• Extremely high APR or airdrop

Risks and Precautions:

• Price Volatility/Rug Risk
• Impermanent Loss
• Need to closely monitor market data

Summary

The PoL mechanism under the Berachain ecosystem is essentially a competitive incentive race between protocols. The best strategy often requires a decentralized allocation and dynamic adjustments:

• Part of the funds is allocated in relatively stable LSD/blue chip/stablecoin pools.
• A small portion of funds to try high-risk, high-volatility altcoins or Meme pools.
• Regularly track the APR of each pool, validator commissions, protocol bribes, and other data to timely optimize mining strategies.

Important Reminder: When participating in emerging ecological projects, it is crucial to pay attention to safety, including contract risks, the rationality of the token model, team background, and other factors. While high APY is certainly attractive, the potential risks in early-stage projects should not be overlooked.