In the rapidly developing world of blockchain technology, Berachain is making waves with its active community culture and innovative consensus mechanism. As a new generation of Layer 1 blockchain, Berachain aims to provide high security, decentralization and scalability, while leveraging the power of meme culture and community to create a vibrant ecosystem.
Berachain attempts to solve the liquidity problem in the DeFi field with its unique three-token model and proof of liquidity consensus (POL) mechanism. By dividing the currencies into base currency, pledge currency and liquidity currency, the three-token model provides users with more participation and incentive mechanisms. At the same time, the POL consensus mechanism improves the security and performance of the network through the dual considerations of equity and time. On January 10, Berachain launched the testnet Artio and plans to launch the mainnet in the second quarter of this year.
01The origin of Bera: From Bong Bears to Berachain
Berachain is a public chain built on MEMME culture, and its origins can be traced back to the non-fungible token (NFT) series Bong Bears, which was initiated by four anonymous founders (Smokey the Bera, Papa Bear, Homme Bera and Dev Bear), who claim to be cryptocurrency natives. The name Bera is a deliberate misspelling of Bear in order to pay tribute to one of the most famous words in the crypto community, "HODL".
The Bong Bears team was inspired by the rebase protocol OlympusDAO, whose OHM tokens traded as high as $1,300 in the fall of 2021. (The price has since fallen to about $10 per OHM.) Bong Bears followed in the footsteps of OlympusDAO, which quickly gained traction in the crypto community. The first rebase NFT collection was soon created, spawning multiple new collections—Bond Bears, Boo Bears, Baby Bears, Band Bears, and Bit, among other types of bear image NFTs. The total value of the Bong Bears series of NFTs has now reached 400E+.
Keep up with the development of blockchain. The Bong Bears team realized that the traditional proof-of-stake (PoS) mechanism, while improving the security of the chain, will lead to a reduction in on-chain liquidity, affecting operations such as transactions and liquidity providers (LPs). In addition, the staking mechanism also has the problems of staking centralization and limited rewards. In order to solve these problems, Bong Bears members are determined to develop a new layer1 public chain to solve the long-standing DiFi liquidity dilemma.
In the history of Berachain shared by Smokey The Bera, a co-founder of Berachain, it was mentioned that after the core members of the Berachain team experienced the bull and bear markets in the cryptocurrency circle, they deeply felt the significance of liquidity to DeFi. Compared with decentralization, scalability, security and interoperability, liquidity is the foundation of all of this. The Bera team absorbed the experience and advantages of successful projects such as Olympus DAO's POL (Protocol Owned Liquidity) concept and Terra's native stablecoin concept, and avoided their shortcomings.
In terms of consensus mechanism, Berachain adopts the most cutting-edge liquidity consensus proof mechanism. Through mechanisms such as liquidity providers, liquidity mining, liquidity proof and liquidity governance, it realizes the coordination between network liquidity, equity centralization and protocols and validators. In terms of the overall framework, Berachain uses Cosmos SDK and Polaris EVM to build a modular EVM framework to provide an execution environment for smart contracts on Berachain. Any project can use Berachain to integrate and build new modular EVMs. In terms of token model, Berachain has created a three-token model to separate gas tokens and governance tokens, which to a certain extent solves the problem of liquidity loss caused by token staking. In terms of culture, Berachain has a good community atmosphere, MEME culture, and does not exclude Ponzi, which greatly accelerates the construction and development of the Berachain ecosystem.
The development of Berachain has attracted widespread attention and support. It has achieved remarkable achievements in financing. On April 20, 2023, Berachain announced their 42.069M Series A financing. This round of financing was led by a number of well-known institutions and individuals, including Polychain Capital, OKX Ventures, Hack VC, Dao 5, Tribe Capital, Shima Capital, Robot Ventures, Goldentree Asset Management, etc. In addition to these institutions, 20 DeFi project founders participated in the investment, including former Dragonfly Capital partner and Celestia founder Mustafa Al-Bassam and Tendermint co-founder Zaki Manian.
02PoL+Three-token Model: Berachain Technical Features and Advantages
Although Berachain originated from meme culture, it is not a technically weak MEME chain. This was fully verified when Berachain announced the launch of its public testnet Artio. Within less than 10 days of its launch, Artio attracted more than 1 million testnet users and more than 70 ecological DApps. The biggest core advantage of Berachain over traditional MEME chains lies in its unique token model and consensus mechanism.
Berachain’s Token Model
Berachain uses a three-token mechanism, namely BERA, BGT (governance token) and HONEY stablecoin. Each token plays a specific role in the network and together builds the Berachain ecological economy.
BERA (Layer 1 native token):
BERA is the native token of the Berachain network and is used to pay for transaction gas fees and block rewards.
BERA maintains the health and vitality of the network through the gas fee mechanism, and is also one of the incentives for users to participate in network activities.
BGT (Governance Token):
BGT is Berachain's governance token and is non-transferable.
Users can obtain BGT by providing liquidity on BEX, lending HONEY, and providing HONEY in Berps' bHONEY vault.
BGT holders can participate in on-chain governance decisions, such as voting on block rewards for staked assets and the selection of staked tokens.
Separating the governance token from the underlying Gas token improves the fairness and transparency of governance, ensuring that the most active users do not lose governance rights by paying transaction fees.
HONEY (native consensus collateral stablecoin):
HONEY is Berachain’s native consensus-collateralized stablecoin, designed to approach a value of 1 USDC.
Users can mint HONEY by pledging other assets on the Berachain platform.
As an in-chain stable currency, HONEY provides a stable transaction medium for decentralized applications, increasing the usability and attractiveness of the platform.
It has not been released yet. When the mainnet is launched, Honey will be able to be minted through HONEYdApp or purchased on BEX.
In addition to the three tokens, Berachain also introduced the concept of Block Capture Value (BCV). BCV comes from transaction fees in DApps such as BEX, Honey, and Perps, and validators will receive these fees as rewards. By staking BGT, users can obtain a portion of BCV income and have the opportunity to receive rewards in BERA, BGT, and HONEY. In addition, Berachain has also borrowed Canto's public DeFi infrastructure concept to launch a native decentralized exchange (DEX), lending platform, and on-chain perpetual contract platform. The income generated by these public chain native protocols will be distributed to BGT holders, further increasing the value of BGT and bringing more income opportunities to holders.
Proof of Liquidity (PoL) Mechanism
Berachain’s Proof of Liquidity (PoL) mechanism is a consensus mechanism based on Proof of Stake (PoS). Its operating mechanism is as follows:
1. Users provide liquidity to the liquidity pool and obtain governance tokens BGT.
2. The user delegates BGT to the validator.
3. The validator generates blocks according to the proportional weight of the delegated BGT, and the delegator and the validator receive rewards from the chain.
4. Validators vote on future BGT inflation settings for different liquidity pools.
5. Validators collect vote bribes from the liquidity pool and distribute them to delegators.
Unlike the traditional Proof of Stake (PoS) consensus mechanism, PoL requires users to contribute to network security by providing liquidity for DeFi primitives within the chain. The purpose of PoL is to encourage users to provide liquidity to the network, thereby creating new BGT tokens and rewarding validators for their contributions. The PoL mechanism has the following features and advantages:
Multi-asset staking: Unlike traditional consensus mechanisms that only use native tokens for staking, PoL allows users to stake a variety of assets, such as ETH, BTC, etc. This diversified staking method helps reduce dependence on a single asset and enhances the health and stability of the entire network through liquidity support for multiple assets.
Coordinate the relationship between validators and liquidity providers: In the PoL system, users provide liquidity to certain pools to earn BGT tokens, which are then used to delegate to validators. Validators generate blocks based on the proportion of BGT delegated to them, while delegators and validators receive rewards from the chain. This mechanism encourages validators to increase liquidity by incentivizing specific LP pools, while the protocol can help validators accumulate BGT stakes through mechanisms such as bribery.
Integration of liquidity and governance: The PoL mechanism integrates the concept of liquidity into the governance structure of the blockchain. Validators can vote to determine the allocation of BGT in different liquidity pools, further enhancing the overall liquidity and governance efficiency of the network.
Long-term impact on network health: Through the PoL mechanism, liquidity can be systematically established to promote efficient transactions, price stability, network growth, user adoption, and the successful operation of decentralized applications. This mechanism also helps to solve the problem of staking centralization in the PoS system, thereby helping to maintain the integrity of the chain and prevent manipulation.
Through the liquidity proof consensus mechanism, Berachain is able to promote consistency between liquidity and network security, enhancing the health and stability of the entire network. In addition, the mechanism also combines liquidity with governance to improve the governance efficiency of the network. Most importantly, PoL has a positive impact on the long-term development and health of the network, and it solves the long-standing problems of insufficient liquidity and equity centralization in the equity proof system.
03Berachain Ecosystem Project Inventory
At present, the Berachain mainnet has not yet been launched, and its ecosystem is still in the early stages of development. However, with its unique PoL proof mechanism and active community culture, Berachain has also attracted a number of excellent projects to join. Here are a few hot projects worth paying attention to:
Ambient
Ambient is a decentralized exchange protocol (DEX) that allows for a two-way AMM that combines centralized and continuous product liquidity on any single blockchain asset. Ambient runs the entire DEX in a single smart contract, combining a two-way AMM model of centralized and environmentally stable product liquidity, and is known as the most efficient Ethereum-based decentralized exchange platform. It is reported that Ambient will be deployed on the Berachain mainnet.
honey jar
Honey Jar is an ecological project built on berachain by Berachain seed investor janitooor.eth and 11 other team members. Two rounds of NFTs have been sold on the eth mainnet. It serves as the key to enter the entire berachain ecosystem. You only need to hold Honeycomb to have a call option on the Berachain ecosystem.
Beradrome
Beradrome is an integral part of the Berachain ecosystem, serving as a liquidity and low-slippage trading center. It combines the functionality of various automated market maker (AMM) models to provide a unique strategy for liquidity mining, token management, and on-chain incentives. The Beradrome platform aims to coordinate incentives within the Berachain ecosystem to provide users with a comprehensive and efficient trading experience. As early as a year ago, Beradrome launched its Tour de Berance NFT series and conducted multiple testnet tests. Its NFT also clearly stated that it will receive a governance token $Bero airdrop based on its rarity when the mainnet is launched.
Sudoswap
Sudoswap is an NFT trading market that will be deployed on the Berachain mainnet in the future. It uses the same AMM model as DeFi DEXs such as Uniswap and Curve to bring liquidity to NFT market transactions. The main feature of Sudoswap is that it allows NFT holders to become liquidity providers by creating trading pools. This is very useful for NFT holders or traders who have a large number of identical NFTs and want to set a reasonable reserve price. After Berachain is officially launched, it is expected to open a bridge for blue-chip NFTs to bridge many NFTs on the mainnet to the Bear Chain and provide incentives, and Sudo is the first NFT market to announce that it will join Berachain.