Berachain: A New Public Chain Driven by Liquidity

Introduction

Berachain is an EVM-compatible L1 public chain focused on DeFi, launched at the end of 2021. The project is built on the Cosmos SDK and employs an innovative Liquidity Proof ( PoL ) consensus mechanism.

Berachain originated from a smoking bear NFT project, which can be traced back to the Bong Bears NFT series launched in August 2021. It later gave rise to series such as Boo Bears, Baby Bears, Band Bears, and Bit Bears.

The Berachain team, after experiencing the ups and downs of the cryptocurrency market, has a deep understanding of the importance of Liquidity to DeFi. They believe that compared to decentralization and scalability, Liquidity is the foundation of the DeFi ecosystem. Therefore, the team decided to design an L1 public chain focused on solving Liquidity issues, which is the original intention behind the birth of Berachain.

Project Development History:

• On November 28, 2023, Berachain will launch internal testing.
• The public testnet "Artio" officially launches on January 11, 2024.
• The mainnet is expected to launch in the second quarter of 2024.

Financing situation:

In April 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 established by an anonymous team, with core members including Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear. Most team members are early participants in the crypto industry, entering around 2015, and have in-depth research on DeFi and public chains. Although the team is anonymous, their ability to secure substantial funding indicates that they have rich connections and resources in the industry.

Mechanism Design

The core goal of Berachain is to solve the on-chain liquidity problem. The project team believes that if a blockchain loses liquidity, it will quickly become a "ghost town". Below are the main mechanism designs of Berachain:

Polaris EVM

Berachain is built on Polaris EVM, which is a foundational operating system for building EVM on top of Cosmos SDK. Polaris uses messaging to connect EVM and Cosmos SDK, separating block construction, processing, and storage from execution.

Advantages of Polaris EVM:

1. Developer-friendly for Ethereum, making it easier to attract EVM ecosystem developers.
2. Support powerful cross-chain interoperability through IBC

PoL proof mechanism

Liquidity Proof ( PoL ) is the core innovation of Berachain, aimed at introducing liquidity for mainstream assets.

PoL mechanism operation process:

1. Users provide Liquidity to the BEX( Berachain native DEX) to obtain BGT governance tokens.
2. Users delegate BGT to validators, and validators generate blocks based on the delegation weight.
3. The principal and validators receive BERA and HONEY rewards.
4. Validators can vote on BGT inflation
5. The validator distributes rewards to the delegator.

Advantages of PoL over PoS:

1. Incentivize liquidity provision while enhancing security
2. Token inflation is more decentralized
3. Coordinated the relationship between asset issuance agreements and validators.

three-token model

Berachain uses three types of tokens:

• BGT: Governance token, non-transferable, can only be obtained by providing Liquidity.
• BERA: Gas Token, obtained by burning BGT 1:1 or as a validation reward.
• HONEY: Native over-collateralized stablecoin, protocol revenue distribution medium

Operating mechanism:

• Users provide Liquidity to earn BGT rewards
• Delegating BGT to validator nodes can earn BERA + HONEY

The model systematically builds Liquidity, allowing users to obtain stakeable BGT through various 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, and collaboration matchmaking. It has launched the Honey Comb NFT, and holders can receive benefits from multiple ecological projects.

Beradrome

The DEX and Restaking Liquidity Market on Berachain adopts ve(3,3) token economics. The "Tour de Berance" NFT series has been launched, and holders will enjoy the rights when Berachain goes live.

Beradoge

Popular Meme projects on Berachain, with two NFT series: "Beradoge Gen 1" and "Mibidiots". Holders may receive BDOGE token airdrops.

Sudoswap

The full-chain NFT AMM Liquidity Market plans to deploy the protocol after launching on the Berachain mainnet. It is expected to support the bridging of blue-chip NFTs.

Beramonium

Berachain's chain game project has launched the "Gemhunters" idle role-playing game. Players can obtain NFTs from other Berachain projects through the game.

Redacted Cartel

DeFi yield protocols cover the bribery market trading and LSD liquidity staking fields. Plans to deploy a new project on Berachain.

Summary

Berachain is committed to maximizing liquidity through an innovative three-token economic model and PoL mechanism. The project is expected to lead DeFi innovation and create a DeFi ecosystem with high liquidity and high capital efficiency. As the user base grows and transaction fee income increases, Berachain may attract more users and projects, forming a positive development flywheel.

However, investors still need to remain rational and pay attention to the project's future development, ecological growth, and protocol security. Whether Berachain can achieve its expected goals will require time to verify.