Berachain: A New Type of L1 Public Chain Focused on Decentralized Finance

Berachain is an EVM-compatible L1 public chain built on the Cosmos SDK, utilizing an innovative liquidity proof ( PoL ) consensus mechanism. The project started at the end of 2021, originating from an NFT series called Bong Bears.

The Berachain team believes that liquidity is fundamental to the DeFi ecosystem, compared to factors like decentralization and scalability. Therefore, they decided to design an L1 public chain focused on solving liquidity issues and created the PoL mechanism and a three-token model.

In November 2023, Berachain began internal testing. In January 2024, its public testnet "Artio" will officially launch, with over 30 native protocols currently in development. It is rumored that the Berachain mainnet may be launched in the second quarter of 2024.

In April 2023, Berachain secured $42 million in funding, reaching a valuation of $420 million. Although the team members remain anonymous, they have extensive experience and a wide network in the cryptocurrency field.

Core Mechanism

Polaris EVM

Berachain is built on the Polaris EVM, which is a fundamental operating system for constructing EVMs on the Cosmos SDK. The Polaris EVM has the following advantages:

1. Developer-friendly for Ethereum, making it easy to attract developers from other EVM chains.
2. Achieve powerful cross-chain interoperability through IBC.

PoL consensus mechanism

The PoL mechanism aims to introduce liquidity of mainstream assets into the Berachain ecosystem.

1. Users provide liquidity to the BEX( Berachain native DEX) to earn BGT governance tokens.
2. Users delegate BGT to validators to participate in block production.
3. The delegator and the validator receive BERA and HONEY rewards.
4. Validators can vote on BGT inflation.

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

1. Incentivize liquidity while enhancing security.
2. The distribution of inflation is more decentralized.
3. Coordinate the relationship between the asset issuance agreement and the validators.

three-token model

Berachain uses three types of tokens:

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

This model stimulates the liquidity of the ecosystem further by separating governance rights and Gas tokens, and allowing diversified assets to participate in staking.

Ecological Projects

1. the honey jar: Berachain ecosystem entry point, responsible for user education, project incubation, and collaboration matchmaking.

2. Beradrome: DEX and Restaking liquidity market, using ve(3, 3) token economics.

3. Beradoge: A highly关注的 Meme token project.

4. Sudoswap: A cross-chain NFT AMM liquidity market, planned to be deployed on the Berachain mainnet.

5. Beramonium: A chain game project on Berachain.

6. Redacted Cartel: Decentralized Finance yield protocol plans to launch a new project on Berachain.

Summary

Berachain aims to maximize liquidity release through an innovative three-token economic model and PoL mechanism, and is expected to lead DeFi innovation. As the user base grows and transaction fee revenue increases, Berachain may form a positive development flywheel.

However, the future development of the project, ecological growth, and protocol security still require continuous attention. Whether Berachain can achieve its grand vision remains to be seen.