Berachain: An Emerging Public Chain for Innovative Decentralized Finance Ecosystem

Berachain is an EVM-compatible L1 public chain focused on Decentralized Finance, launched at the end of 2021. It is built on the Cosmos SDK and employs an innovative liquidity proof (PoL) consensus mechanism.

Development History

Berachain originated from a smoking bear NFT project, which can be traced back to the Bong Bears series of NFTs launched in August 2021. Subsequently, this NFT gave rise to multiple series, including Boo Bears, Baby Bears, Band Bears, and Bit Bears.

The core members of the Berachain team, after experiencing the ups and downs of the crypto market, have a profound understanding of the importance of liquidity in Decentralized Finance. They decided to design an L1 public chain that incorporates the advantages of successful DeFi projects while avoiding their shortcomings, thus giving birth to Berachain. The team designed a liquidity proof ( PoL ) mechanism, laying the foundation for Berachain's three-token model.

In November 2023, Berachain launched its internal testing. On January 11, 2024, the public testnet "Artio" will officially go live. It is reported that more than 30 native protocols are under development, and several well-known protocols from other networks are also planning to be deployed on Berachain. The mainnet of Berachain 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 participation from institutions including Hack VC and OKX Ventures, valuing the company at $420 million.

Team Background

Berachain was founded by an anonymous team, with co-founders including Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear. The recently joined Vice President of Engineering, Baloo the Bera, previously served as the engineering lead at Mysten Labs. Most team members are early participants in the crypto space, having entered around 2015, and have an in-depth understanding of Decentralized Finance and public chain development.

Core Mechanism

Berachain aims to solve on-chain liquidity issues. Its core design includes:

Polaris EVM

Berachain is built on Polaris EVM, which is an EVM-based operating system constructed on top of the Cosmos SDK. Polaris uses messaging to connect EVM and Cosmos SDK, separating block construction, processing, and storage from execution. This architecture has the following advantages:

1. Developer-friendly for Ethereum, easy to attract EVM ecosystem developers
2. Achieve powerful cross-chain interoperability through IBC

PoL proof mechanism

Proof of Liquidity ( PoL ) is Berachain's innovative consensus mechanism, aimed at introducing mainstream asset liquidity:

1. Users provide liquidity to the native DEX to obtain BGT governance tokens.
2. Users delegate BGT to validators to participate in block production.
3. The delegator and validator receive BERA and HONEY rewards
4. Validators can vote on BGT inflation
5. The validator distributes bribes to the delegator.

Compared to PoS, the PoL mechanism has the following advantages:

1. Incentivize liquidity while enhancing security.
2. Token inflation is more decentralized
3. Coordinate the asset issuance agreement with the validator relationship

three-token model

Berachain adopts a three-token model:

• BGT: Governance token, non-transferable, can only be obtained by providing liquidity.
• BERA: Gas Token, obtained through a 1:1 one-way burn of BGT or as a validation reward
• HONEY: Native over-collateralized stablecoin, medium for protocol revenue distribution.

The model stimulates liquidity further by separating governance rights from Gas tokens and diversifying the stakable assets.

Important Ecological Projects

the honey jar

As the entry point of the Berachain ecosystem, it is responsible for user education, project incubation, and partnership matchmaking. The Honey Comb NFT has been launched, and holders can receive benefits from multiple ecosystem projects.

Beradrome

The DEX and Restaking liquidity market on Berachain adopts ve(3,3) token economics. Holders of its NFT series "Tour de Berance" are expected to receive future token airdrops.

Beradoge

The highly关注ed Meme project on Berachain has two NFT series. Holders may receive airdrops of BDOGE tokens.

Sudoswap

The full-chain NFT AMM liquidity market plans to deploy the protocol after launching on the Berachain mainnet and is expected to support blue-chip NFTs across chains.

Beramonium

The chain game project of Berachain has released the idle RPG game "Gemhunters". Players can obtain NFTs from other Berachain projects through the game.

Redacted Cartel

Decentralized Finance yield protocol, involving bribery market trading and LSD liquid staking, plans to deploy a new project on Berachain.

Summary

Berachain maximizes liquidity release through its innovative three-token economic model and PoL consensus mechanism, and is expected to lead DeFi innovation, creating a high liquidity and high capital efficiency DeFi ecosystem. With user growth and increased fee revenue, Berachain is expected to attract more users and projects, forming a positive growth flywheel.

However, the future development of Berachain still needs to focus on factors such as the project's own progress, ecological growth, and protocol security. Investors should remain rational and continuously pay attention to the project's development dynamics.