Berachain’s PoL Mechanism, in addition to creating a flywheel effect to increase TVL, can also release liquidity from many native tokens that exist in PoS. This article is sourced from Dodo Research, compiled, translated, and written by Foresight News.
(Background:
Cosmos Ecology Rises, What Opportunities are Worth Paying Attention to on Berachain?
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(Context:
INJ and TIA Break Historical Highs, What Potential Tokens Does the Cosmos Ecology Have?
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Table of Contents
Team Background
Public Chain Mechanism
Three-Coin Model
Ecological Projects
the honey jar
Beradrome
Sudoswap
Redacted Cartel
Algebra
Author’s Perspective
Berachain, also known as the Bear Chain, has sparked discussions in the crypto community again with the recent launch of its public testnet, “Artio.” Its extremely cult-like community has attracted the attention of degens in the industry since its launch at the end of 2021. On April 20, 2023, it announced a massive financing of 42 million led by Polychain with participation from OKX, which further drew attention to this unique public chain project. With the public testnet now live, the mainnet is estimated to be launched in the near future.
This week, Dr. DODO will take you through the team background, public chain mechanism, and the ecological projects worth paying attention to. These three aspects will help you get to know this upcoming new public chain.
On April 20, 2023, Berachain disclosed its A-round financing of 42.069 million. It was led by Polychain Capital with participation from Hack VC and OKX Ventures. From the amount and date of this financing, it is evident that the Bera team has a cult-like attribute. Its four anonymous founders (Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear) claim to be native crypto degens, and the name “Bera” intentionally misspells “Bear” as a tribute to one of the most famous words in the crypto community, “HODL.”
When talking about the team background, it is necessary to mention their relationship with Olympus DAO. According to Berachain co-founder Smokey, they are a group of early investors in Olympus DAO who met in the community. Initially, it was just an NFT project called Bong Bears, which paid homage to the Ponzi mechanism of OHM and created the first rebase NFT collection, along with several new collections – Boo Bears, Baby Bears, Band Bears, and Bit Bears.
However, after the collapse of the crypto market, these DeFi enthusiasts were inspired by Olympus DAO’s Protocol Owned Liquidity (POL) and Terra’s native stablecoin concept. They decided to design their own L1 public chain, drawing on the advantages of these successful DeFi projects and avoiding their shortcomings. This gave birth to Berachain.
Source: https://opensea.io/collection/bongbears
Berachain is a public chain that adopts Proof of Liquidity (PoL) and is built on the Polaris EVM, running on the Cosmos SDK.
As mentioned earlier, the Berachain team highly appreciates the Olympus DAO’s Protocol Owned Liquidity mechanism. Therefore, they have innovatively introduced the Proof of Liquidity mechanism. According to Smokey, after experiencing many DeFi projects, they realized that liquidity is the most important factor for a project’s success. Therefore, the team’s initial direction was to bring as much liquidity as possible from blue-chip tokens into Berachain. In the Proof of Liquidity mechanism, users must provide liquidity by depositing their blue-chip tokens such as BTC and ETH into the BEX (Berachain’s native DEX) to obtain the protocol governance token $BGT. The $BGT token will be responsible for the validation mechanism of the on-chain nodes and will have voting governance functions (such as determining the distribution of LP token rewards).
Source: Twitter
Next, let’s introduce Berachain’s three-coin model. Due to the non-transferable design of the $BGT token, the Gas Token used by users on the chain will be obtained by burning $BGT at a 1:1 ratio, and it draws inspiration from Terra’s native stablecoin design. Users can mint the native stablecoin $Honey by over-collateralizing $BGT through the Honey Dapp.
$BGT: Liquidity Proof Token used for on-chain validation and governance.
$Bera: Gas Token obtained by burning $BGT at a 1:1 ratio.
$Honey: Native over-collateralized stablecoin.
In addition to referencing Olympus DAO and Terra, Berachain also draws inspiration from Canto’s public DeFi infrastructure. It will launch a native DEX, native lending, and on-chain perpetual contract platform. The revenue generated by these native protocol on-chain operations will be distributed to $BGT holders. Even its native DEX draws inspiration from Solidly ve33’s vote bribery mechanism, where node validators can determine the incentive allocation for the native DEX LP pool through voting and receive bribery rewards.
This combination is expected to generate a flywheel effect for Berachain, attracting more users to provide liquidity and obtain the protocol token $BGT.
Source: Twitter
Speaking of the ecosystem, we must mention the honey jar (THJ). THJ describes itself as the entry point for the Berachain ecosystem and has a significant influence in the community. It is responsible for educating users about Berachain and facilitating the incubation of ecosystem projects and the matchmaking between various protocols. THJ can be seen as the BD department of Berachain. Currently, THJ has launched the Honey Comb NFT, but its specific function has not been disclosed. In addition, it is worth paying attention to the projects mentioned on THJ’s Chinese Twitter and the founder Jani’s Twitter.
Another project to introduce is Beradrome. Beradrome is a ve33 DEX on Berachain and will focus on the Restaking liquidity market. The team launched its Tour de Berance NFT series a year ago and conducted multiple tests on the testnet. The NFTs clearly state that they will receive governance token $Bero airdrops based on rarity when the mainnet is launched.
Sudoswap is an NFT liquidity market currently deployed on the mainnet. It focuses on innovative liquidity and aligns with the central ideas of Berachain. It has already announced the deployment of its protocol on Berachain once the mainnet is launched. After Berachain is officially launched, it is expected to bridge many NFTs on the mainnet to the Bear Chain and provide incentives. Sudo is one of the first NFT markets to announce its involvement in Berachain.
Redacted Cartel, incubated by the New Order team, is a DeFi yield protocol with multiple sub-products covering the bribery market trading and LSD liquidity staking fields. It has previously announced the deployment of new projects on Berachain, but there is currently no more detailed information. Due to the built-in vote bribery mechanism in Berachain, it can be expected that Redacted, as a type of DeFi bribery market yield ecological project, will have the opportunity to thrive on the Bear Chain.
Algebra is a backend product that outsources transaction functionality. Its main purpose is to sell DEX backend contracts to any project interested in building a DEX, so they don’t have to rewrite the contracts themselves. Currently, its product Algebra Integral V4 is live on Berachain’s testnet. The V4 features include hooks/plugins functionality, and it welcomes all projects interested in deploying a DEX on Berachain to collaborate with them. This collaboration has received a warm welcome from Bera co-founder Smokey.
The five projects mentioned above mainly introduce projects that already have investment targets and practical products before the Bear Chain’s mainnet is launched. After the mainnet is launched, more protocols will be deployed, so stay tuned.
Compared to the traditional PoS mechanism, the author believes that the PoL mechanism is superior in terms of liquidity and security. Berachain’s PoL mechanism not only creates a flywheel effect to increase TVL but also releases liquidity from many native tokens that exist in PoS. By restricting LP participation, it ensures that only blue-chip tokens can obtain $BGT and protects security.
Of course, technology is just one of the reasons why the Bear Chain is so popular. More importantly, it is the cult and meme attributes of its community. The community plays a significant role in the blockchain world. Projects that value their community can gain a large number of loyal fans who voluntarily promote them. This can give the project more motivation to continue in the crypto industry, where new projects are hyped and old ones are forgotten, and help them go further.
Overall, the author is optimistic about the development of the Bear Chain in 2024. The team is skilled in creating expectations and designing Ponzi models. The overall architecture of the public chain is different from other common L2 public chains. Currently, both Bera’s NFT and the ecosystem projects’ NFT/tokens have brought considerable wealth effects to users. After the mainnet is launched, there will be more opportunities to participate in various new projects. In addition, Berachain’s testnet has also launched testing tasks, so it is worth participating in them in your spare time.
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