Berachain, introduced by the Berachain team, has recently sparked discussions in the crypto community with the launch of its testnet “Artio”. The community’s cult-like following has attracted attention from crypto enthusiasts since its launch at the end of 2021. On April 20, 2023, it was announced that Berachain secured a massive $42 million in funding led by Polychain and participated by OKX. With the public testing of the testnet, the mainnet is expected to launch in the near future.
In this article, Dr. DODO will introduce the team background, public chain mechanism, and notable ecosystem projects of Berachain. These three aspects will provide insights into this upcoming new public chain.
On April 20, 2023, Berachain disclosed its $42.069 million Series A funding, led by Polychain Capital with participation from Hack VC and OKX Ventures. This funding amount and date reflect the cult-like attributes of the Bera team, with its four anonymous founders (Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear). They claim to be native crypto degens, and the misspelling of “Bera” in their name pays homage to the famous word “HODL” in the crypto community.
Speaking of the team background, it is worth mentioning their relationship with Olympus DAO. According to Smokey, the co-founder of Berachain, they are a group of early investors in the Olympus DAO community. Initially, it started as an NFT project called Bong Bears, inspired by the Ponzi mechanism of OHM. They created the first rebase NFT collection and derived several new collections such as Boo Bears, Baby Bears, Band Bears, and Bit Bears.
After experiencing the collapse of the crypto market, these DeFi enthusiasts were inspired by the POL (Protocol Owned Liquidity) concept of Olympus DAO and the native stablecoin concept of Terra. They decided to design their own L1 public chain, drawing on the strengths of successful DeFi projects while avoiding their weaknesses. This led to the birth of Berachain.
Berachain is a Proof of Liquidity (PoL) mechanism-based EVM public chain built on Polaris EVM and executed on the Cosmos SDK. The innovative PoL mechanism of Berachain, inspired by the high appreciation for Olympus DAO’s Protocol Owned Liquidity mechanism, focuses on liquidity as a crucial factor for a project’s success. The aim is to bring liquidity from many blue-chip tokens to Berachain as much as possible. Users must provide liquidity by forming LPs (liquidity pools) with blue-chip tokens such as BTC and ETH on the native DEX of Berachain, called BEX, to obtain the protocol governance token $BGT. The $BGT token will be responsible for the verification mechanism of on-chain nodes and have voting governance functions (such as determining the distribution of LP pool token rewards).
Furthermore, Berachain introduces the Three Coin Model. Due to the non-transferability of $BGT, users’ Gas Tokens will be obtained by burning $BGT at a 1:1 ratio, and they can use the Honey Dapp to mint native stablecoins called $Honey by over-collateralizing $BGT.
In addition to drawing inspiration from Olympus DAO and Terra, Berachain also incorporates the concept of Canto, a public DeFi infrastructure. It will launch a native DEX, native lending, and a native on-chain perpetual contract platform. The revenue generated by these native on-chain protocols will be distributed to $BGT holders. The native DEX also adopts the Solidly ve33 voting bribery mechanism, allowing node validators to vote on the allocation of incentives for the native DEX LP pools and receive bribery rewards.
This combination is expected to create a flywheel effect for Berachain, attracting more users to provide liquidity and obtain the protocol token $BGT.
The ecosystem of Berachain includes several notable projects. The honey jar (THJ) serves as the entry point to the Berachain ecosystem and plays a significant role in educating users about Berachain and facilitating the incubation of ecosystem projects and collaborations with various protocols. Beradrome is a ve33 DEX on Berachain that focuses on the Restaking liquidity market. It has already launched the Tour de Berance NFT series and conducted multiple testnet tests. Sudoswap is an NFT liquidity market deployed on the mainnet, which aligns with the innovative liquidity focus of Berachain. It has announced its intention to deploy its protocol once Berachain’s mainnet is live, bridging many NFTs from other chains to Berachain and providing incentives. Redacted Cartel, incubated by the New Order team, is a DeFi yield protocol with various sub-products, including bribery market trading and LSD liquidity pledging. It has announced its plan to deploy a new project on Berachain, but details are yet to be revealed. Algebra is a backend product for outsourced trading features, providing DEX backend contracts to projects interested in building DEX without the need to rewrite contracts. Its product, Algebra Integral V4, has already been tested on the Berachain testnet, and it welcomes collaboration with projects interested in deploying DEX on Berachain.
These projects present investment opportunities even before the mainnet of Berachain is launched. They have practical products, and after the mainnet launch, more protocols are expected to deploy on Berachain. It is advisable to pay attention to these projects.
Compared to traditional PoS mechanisms, the author believes that the PoL mechanism of Berachain surpasses in terms of liquidity and security. It not only generates a flywheel effect to increase TVL but also releases the liquidity of native PoS tokens. By restricting LP methods, only blue-chip tokens can obtain $BGT, thus ensuring security.
Of course, technology is just one aspect of why Berachain is so popular. The community’s cult and meme attributes play a more significant role. Community is crucial in the blockchain world, and projects that value their community can gain a large number of loyal fans who voluntarily promote them. This can provide motivation and support for projects in the crypto space, allowing them to go further.
Overall, the author is optimistic about the development of Berachain in 2024. The team excels in creating hype and designing Ponzi models. The overall architecture of the public chain is different from other common L2 public chains. Currently, both the NFTs of the Bera team and the NFTs/tokens of ecosystem projects have brought considerable wealth effects to users. After the mainnet launch, there will be more opportunities to participate in various new projects. Additionally, the Berachain testnet has introduced test tasks, allowing users to participate during their free time.
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