Recently, the new public chain Berachain completed US$42 million in financing, led by Polychain Capital, with participation from Hack VC, dao5, Tribe Capital, Shima Capital, Robot Ventures, Goldentree Asset Management, and OKX Ventures.
Prior to this, no financing information could be found about it, and it has not yet been launched on the public testnet (expected to be launched in the next few weeks). What enabled Berachain to be valued at US$420 million from the start?
The answer may be "Next Generation of Liquidity".
Smokey, the founder of Berachain, once said:
“Proof of Liquidity Consensus is the first original coordinated incentive between protocol-level liquidity and security. Berachain has a unique opportunity to become the protocol with the largest total accessible liquidity of any chain in existence – on the EVM and Cosmos ecosystem, and facilitate a range of transaction activity while promoting network security. If executed correctly, we will build a system with the capital depth and speed of an off-chain solution and the transparency and customizability of an on-chain ecosystem. agreement."
Liquidity is gold on the chain and the source of living water for DeFi. Because of it, Curve wars have arisen and vampire attacks have spread. People will inevitably divert liquidity to the most exciting/lucrative avenues.
You may have heard of consensus mechanisms such as PoW, PoS, and PoH. Now, let’s take a look at this innovative L1 that uses “liquidity consensus proof” and aims to become a “DeFi native chain”.
What is the new public chain Berachain going to do?
One of the current common problems with L1s is liquidity, and the liquidity that flows into them is often short-lived because there are no compelling incentives to retain them. The development team discovered this, and Berachain was born.
Berachain is an EVM Layer-1 blockchain built using the Cosmos SDK and is EVM compatible. By combining Cosmos’ native consensus mechanism Tendermint with its own Proof of Liquidity consensus, it can provide faster transaction speeds, lower transaction costs and instant finality.
What is Berachain’s Proof of Liquidity Consensus?
It can be simply understood as incentivizing validators to pledge whitelist assets such as BTC, ETH and stablecoins on the validator vault. Similar to dPoS, users can entrust deposits to specific validators to provide liquidity for the on-chain protocol. And receive a portion of the DeFi protocol revenue and $BERA in return. The more you deposit, the greater the rewards. This can bring abundant liquidity to DeFi on Berachain.
Whitelist asset list:
L1 tokens: wETH, wstETH, wBTC, wAVAX, wFTM, ATOM, wBNB, $BERA
Stablecoins: USDC, USDT, DAI, FRAX, BUSD
DeFi governance tokens: to be launched
Currently, staker reward distribution weights are determined by the team, but will be left to governance when Berachain goes live:
L1 Tokens - 80% ($BERA gets 33%)
Stablecoins – 15%
DeFi governance tokens - 5%
At the same time, liquidity consensus proof is also a witch resistance mechanism:
Users may experience intermittent losses. In short, it is possible to deposit 10 Token A and only have 9 Token A when withdrawing.
However, users will receive part of the protocol revenue and block rewards.
Using a three-token economic model
Berachain abandons the single native token economic model commonly used in traditional public chains. Its team believes that every decentralized economy should have three main parts that are critical to its operation:
The first is the medium of pricing and execution (Gas), which is used to price work units and execute work with smart contracts; the second is the medium of consensus and decision-making (governance), which is used to organize democratic functions and reach consensus and decisions; the third A medium for transactions through a common stable denomination (stable).
Therefore, Berachain uses the corresponding three-token economic model:
1. $BERA: Berachain’s Gas token. Issuing at an inflation rate of 10%, meaning the supply of $BERA will increase over time. By staking your assets, you can earn $BERA block rewards and a portion of the protocol’s revenue.
2. $BGT: Berachain’s governance token that can vote on new whitelisted assets. $BGT is non-transferable and can only be obtained by staking $BERA, which ensures long-term consistency for users.
3. $HONEY: Berachain’s native over-collateralized USD stablecoin. $HONEY is the Money of the Berachain ecosystem and is the payment method by which protocol revenue is paid to stakers. It will be overcollateralized by at least 150% to ensure a peg to the U.S. dollar.
This economic model, dubbed “Tri-Token” by the development team, assigns a unique role to each token to encourage long-term user usage and maintain consistent on-chain liquidity.
Where do your pledged assets go and where do the profits come from?
Staked assets are held in validator vaults. As coordinated by the governance system, assets are paired with $HONEY to provide liquidity to official vAMM, DEX and lending protocols on Berachain.
At this time, you will receive the corresponding block reward $BERA based on the amount of your pledged assets.
In addition to serving as Gas tokens, $BERA can also be staked to obtain the governance token $BGT.
By holding $BGT, you can not only participate in governance voting, but also receive part of the income from the official protocol mentioned above.
Although your assets are pledged and locked, they can be used as collateral to lend $HONEY. Users can use $HONEY for spot or margin trading, and can even lend $HONEY to purchase more assets and pledge them again through "leverage staking".
From this point of view, Berachain stakers have such a high level of asset efficiency while receiving staking rewards that they have greater incentives to stake on Berachain compared to other networks.
To sum up, Berachain aims to become a DeFi native chain, and the development team has designed a sustainable consensus mechanism from scratch that focuses on coordinating investors, builders and users.
Under the operation of Liquidity Consensus Proof, Berachain's liquidity grows simultaneously with its utilization and market value; every protocol built on Berachain will have vested interests in the future of the network, and TVL will increase simultaneously; and users who pledge can not only obtain Governance rights can also earn more token rewards. This again improves network security and witch resistance.
Grasp the trends of Berachain ecological projects in advance
Although Berachain has not yet been launched on the test network, its popularity is gradually increasing, and many native projects have emerged in the Berachain ecosystem recently.
1. OR
CrocSwap：
Native AMM DEX integrated with Berachain.
Goldilocks：
AMM and NFT lending platform offering multiple yield strategies.
Beradrome：
AMM focused on capital efficiency. A fork of the star project Velodrome on Optimism.
2. Loan
Stacking Salmon：
A loan agreement that provides the borrower with leverage benefits.
BeraCreek Finance：
Lending protocol with segregated pools.
3. Revenue aggregator
Hiberanation：
Similar to Beefy Finance, an automated compounder dedicated to profit maximizing strategies.
4. NFT Market
GumBall：
An NFT market focused on NFT liquidity.
BeraMarket：
NFTFi + NFT lending.
5. GameFi
Honey Pool：
The savings + bonus agreement allows users to deposit USDC and participate in daily draws. The bonus is the interest generated by all deposited USDC. Even if they do not win, users can withdraw USDC at any time.
ChainBet：
On-chain gambling platform.
Beramonium:
A single-player role-playing game. These include an in-game marketplace where players can trade loot, and an in-game economy driven by players.
6. Option Agreement
B2 Option：
Native on-chain options protocol.
7. meme project
Baby Bear：
Meme project with NFT and DeFi yield farm.
Cheat YOU：
A meme project.
8. NFT series
Without Bone Bear, there would be no Berachain (built by the Bone Bear team). Launched in August 2021, Bond Bears is a successful NFT series. The series went through 5 rebases to form new series such as: Bond Bears, Boo Bears, Baby Bears, Band Bears, Bit Bears.
Bong Bear NFT provides holders with several advantages.
- These NFTs may be linked to $BGT (NFTs may also become whitelisted assets that can be staked by users on the network)
- Obtain airdrops from Berachain ecological projects
- Get new rebase
Other NFT collections on Berachain include The Honey Jar, Bera Chill, Yokai Studio, Bera Colletive.
9. Settlement projects
Redacted Finance：
A DeFi ecosystem that provides on-chain liquidity and governance for DeFi protocols.
Protectorate：
A protocol designed to increase deep and sustainable liquidity for NFT and NFTFi protocols.
OlympusDAO：
OlympusDAO invested $500,000 in Berachain, participating in the network as a strategic partner in addition to receiving $BERA. Additionally, OlympusDAO will deploy Olympus Pro on Berachain.
dAMM Finance：
An unsecured lending platform.
Synapse Finance：
A cross-chain DEX.
C3 Tip: The views, thoughts and opinions expressed here are solely those of the author. This article does not contain investment opinions or recommendations. Every investment and transaction involves risk. There are three realms of investment: seeing, understanding, and holding. Entrepreneurship also has three realms: thinking, doing, and completing. Each level seems to be about the same on paper, but in fact it is much different. Each level can eliminate more than 90% of the people.
