Berachain: Innovative Decentralized Finance Public Chain

Berachain is an EVM-compatible L1 public chain focused on Decentralized Finance, built on top of the Cosmos SDK, and employs an innovative liquidity proof (PoL) consensus mechanism. The project originated from the Bong Bears NFT series launched in August 2021 and later extended into multiple related NFT collections.

The Berachain team, after experiencing the ups and downs of the crypto market, has come to deeply understand the importance of liquidity in Decentralized Finance. They believe that compared to characteristics like decentralization and scalability, liquidity is the foundation of Decentralized Finance. Therefore, the team decided to design a new L1 public chain, drawing on the advantages of successful DeFi projects while avoiding their flaws. This idea ultimately led to the creation of the Berachain project and its unique liquidity proof mechanism, laying the foundation for its tri-token model.

In November 2023, Berachain launched its internal testing. On January 11, 2024, its public testnet "Artio" officially went live. It is reported that over 30 native protocols are under development, and well-known projects from other networks, including Pendle, Redacted, and Sudoswap, also plan to deploy on Berachain. Industry news suggests that the Berachain mainnet may go live in the second quarter of 2024.

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

Berachain was founded by an anonymous team, with core members including Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear. Recently, former Mysten Labs engineering director Baloo the Bera joined as the Vice President of Engineering. Most team members are seasoned professionals who have been involved in the crypto space since around 2015, with a deep understanding of Decentralized Finance and public chain development. Although the team remains anonymous, their successful financing indicates that they have extensive connections and resources in the crypto circle.

Innovation in Technical Mechanisms

The core goal of Berachain is to solve the on-chain liquidity problem. The team believes that once a public chain loses liquidity, it will quickly devolve into a "ghost town." This insight comes from their experiences during the DeFi Summer.

Polaris EVM

Berachain is built on Polaris EVM, which is a foundational operating system for constructing EVM on the Cosmos SDK. Polaris connects the 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.

The main advantages of using Polaris EVM:

1. Friendly to Ethereum developers, making it easier to attract developers from other EVM chains.

2. Powerful cross-chain interoperability. As a Cosmos subchain, Berachain natively supports the IBC protocol, which is beneficial for liquidity inflows from other networks.

PoL Consensus Mechanism

The liquidity proof ( PoL ) mechanism is a major innovation of Berachain, aimed at bringing the liquidity of mainstream assets into the network.

Operation process of the PoL mechanism:

1. Users provide liquidity to the native DEX BEX and receive governance token BGT.

2. Users delegate BGT to validators, and validators generate blocks based on the proportion of delegated BGT.

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 traditional PoS, the PoL mechanism has the following advantages:

1. Incentivize liquidity while enhancing security.

2. The distribution of inflation is more decentralized, avoiding concentration of profits among single token holders.

3. Coordinated the relationship between the asset issuance agreement and the validators, facilitating cooperation between the two parties.

Three Token Model

Berachain adopts a unique three-token model:

BGT: Governance token, non-transferable, can only be obtained by providing LP on BEX.

BERA: Gas token, can be obtained through BGT 1:1 one-way burn, or as a validation reward.

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

The operation of this model:

• Users provide liquidity on Berachain for ( BERA, HONEY, or other trading pairs ) to earn BGT rewards.
• Delegate BGT to validators to earn BERA and HONEY rewards.

This design systematically builds liquidity, with the main innovation being:

1. Separate the governance token (BGT) from the Gas token (BERA).

2. The only way to obtain BGT is to provide liquidity to BEX.

This means that Berachain's staking supports a more diverse range of assets, further stimulating liquidity. The model draws on the experiences of various DeFi projects, such as the decentralized governance of Curve and the native stablecoin concept of Terra.

Ecosystem Project Overview

the honey jar

the honey jar is an important entry point for the Berachain ecosystem, responsible for user education, project incubation, and partnership facilitation. Its web design mimics a computer desktop, with various related information placed in different "software".

the honey jar has launched the Honey Comb NFT. Although no specific empowerment has been promised, as a core community NFT, holders may receive airdrops, whitelists, and other benefits from multiple partnership projects.

Beradrome

Beradrome is the DEX and Restaking liquidity market on Berachain, utilizing ve(3,3) token economics. The team previously launched the "Tour de Berance" NFT series, and holders will enjoy rebase rights upon Berachain's launch and may receive BERO or hiBERO token airdrops.

Beradoge

Beradoge(BDOGE) is a highly anticipated Meme project on Berachain, featuring two NFT series: "Beradoge Gen 1" and "Mibidiots." The project team has stated that these NFT holders will receive "a bunch of useless stuff" or "a lot of BDOGE." It is rumored that BDOGE may be airdropped to NFT holders of other Berachain projects.

Sudoswap

Sudoswap is a full-chain NFT AMM liquidity market that has announced its protocol deployment after the launch on the Berachain mainnet. Sudoswap is expected to support the bridging of blue-chip NFTs and become one of the first NFT markets to enter Berachain.

Beramonium

Beramonium is the chain game project of Berachain, which has launched an idle RPG game called "Gemhunters." Players can have Beramium Genesis beras execute tasks to obtain gems, which can be exchanged for NFTs from other well-known Berachain projects.

Redacted Cartel

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

Summary

Berachain's innovative three-token economic model separates gas and governance, maximizing liquidity release and resolving the contradiction between staking participation in governance and liquidity. This positions Berachain to potentially lead DeFi innovation and create a protocol ecosystem with high liquidity and capital efficiency.

With the growth of users and an increase in transaction fee revenue, Berachain is expected to attract more users and projects, forming a positive growth flywheel. However, continuous attention is still needed in areas such as the project's future development, ecosystem expansion, and protocol security.